Economy

FinMin issues office memorandum for DA increases

Our Bureau New Delhi | Updated on July 20, 2021

More than 48 lakh employees to get revised salary for July

The Finance Ministry on Tuesday issued an office memorandum (OM) to make the higher rate of dearness allowance (DA) effective, making it possible for government employees to get the revised DA from the current month itself.

With this, over 48 lakh employees (barring Cabinet Secretary) will get the additional amounts between ₹2,128 and ₹26,482 (inclusive of tax). For the Cabinet Secretary, the increase is expected to be over ₹30,000. Apart from DA hike, government employees having self-accommodation will get additional increase depending upon the city they reside. Some of the employees are also set to get annual increment of around 3 per cent in their July salary.

“The President is pleased to decide that the Dearness Allowance payable to Central Government employees shall be enhanced from the existing rates of 17 per cent to 28 per cent of the basic pay with effect from July 1, 2021,” the OM said. Further, it mentioned the increase subsumes the additional instalment arising on January 1, 2020, July 7, 2020 and January 1, 2021. The rate of DA for the period from January 1, 2020 till June 30, 2021 shall remain at 17 per cent, which means no arrears are to be paid.

Last year, on April 23, the Finance Ministry had put a freeze on DA/DR till July 1, 2021 on account of higher pandemic-related expenditure.

Annual outgo

Annual outgo from the DA/DR (Dearness Relief) revision would be over ₹34,400 crore while for July-February period of this fiscal, the amount would be ₹22,934.56 crore.

The implementation of the Seventh Pay Commission Report prescribes that the rate of Housing Rent Allowance be increased 3 percentage points for X category cities/towns, 2 per cent for Y category and 1 per cent for Z category, in case the rate of DA crosses 25 per cent. This means employees living in these category cities/towns will now get HRA at 27, 18 and 9 per cent, respectively. However, there will be no changes in HRA for entry-level employee with basic pay of ₹18,000, as the minimum HRA is already fixed at 30 per cent for them.

DA and DR are revised on the basis of Consumer Price Index – Industrial Worker (CPI-IW) twice a calendar year. For 2021, the first instalment (due on January 1) has been restored while a call may be taken on the second (due on July 1) in September-October based on the change in inflation index.

Another OM is expected from the Department of Pension & Pensioners’ Welfare so that DR to be paid at higher rate to over 65 lakh Central government pensioners.

Published on July 20, 2021

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