Cabinet approves 6% hike in DA

Central Government employees and pensioners will get 6 per cent higher dearness allowance (DA), or 51 per cent of basic pay, with retrospective effect from January 1 this year. At present, the DA is paid at 45 per cent of basic pay. The decision was taken by the Union Cabinet at its meeting here on Tuesday. Amid high retail prices and inflation at above 9 per cent, the DA hike will provide relief to 50 lakh Central Government employees and 35 lakh pensioners. The hike may cost the exchequer Rs 6,668.52 crore in the next financial year after the additional 6 per cent DA payout is factored in from January 1 to March 31 this year.

The Consumer Price Index (industrial workers), which is the basis for revising the dearness allowance, was 9.47 per cent in December and 9.30 per cent in January. Headline inflation, based on movement in wholesale prices, was 8.31 per cent in February, above the comfort level of 5-6 per cent. Food inflation, too, was hovering over 9 per cent. Employees' unions, however, felt that considering the spiralling food prices, the 6 per cent hike was inadequate to meet the burden on rising household expenses.

“In the past six months, there has been a 19 per cent rise in food prices, with the entire CPI basket averaging at 14-15 per cent. Technically, we can't say anything, as it is based on the CPI. But we have always held that the inputs that go into computation of CPI are defective,” Mr K.K.N Kutty, Secretary-General, Confederation of Central Government Employees and Workers, told Business Line . Sources said the hike in DA would be in accordance with the formula prescribed by the Sixth Pay Commission for Central Government employees. The DA is revised twice a year, on January 1 and July 1.

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