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In a major relief for Central government staff and pensioners, the Union Cabinet unfreezed dearness allowance (DA) and dearness relief (DR) on Wednesday. The government also raised the DA/DR to 28 per cent from 17 per cent, benefiting over 48 lakh employees and 65-lakh-plus pensioners. The new rates are applicable from the July salary/pension. The DA hike will lead to a monthly salary rise of ₹1,980 at the minimum salary level (₹18,000) and ₹27,500 at the maximum level (₹2,25,000). Plus HRA at the maximum rate will be another 3 per cent of basic pay.
Employees having self-accommodation will also benefit from a hike in the house rent allowance. Also, one more DA/DR instalment may come before the festival season.
“The Government has decided to increase the Dearness Allowance to Central Government employees and Dearness Relief to pensioners from July 1, 2021 to 28 per cent representing an increase of 11 percentage points over the existing rate of 17 per cent of the Basic Pay/Pension,” Information and Broadcasting Minister Anurag Singh Thakur told a press conference here. The increase reflects the additional instalments arising on January 1 and July 1, 2020 and January 1, 2021.
Thakur clarified that the rate of DA/DR for the period January 1, 2020 to June 30, 2021 “shall remain at 17 per cent.” This means no arrears will be given.
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. With State governments also to follow suit, a saving of ₹1.2-lakh crore (Centre and States combined) was expected.
Financial Implication
Thakur said the annual outgo from the DA/DR revision would be over ₹34,400 crore. A senior official said the impact on the exchequer on account of DA/DR would be ₹22,934.56 crore (from July 2021 to February 2022).
HRA benefit
Another official said employees with self-accommodation will get one more benefit. An office memorandum on 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 get HRA at 27, 18 and 9 per cent, respectively.
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.
Salary of MTS having Grade Pay ₹1,800 ( level 1)
Due Drawan diff
Basic pay ₹18,000 ₹18,000
DA ₹5,040 ₹3,060
TA ₹1,350 ₹1350
DA on TA ₹378 ₹230
₹24,768 ₹22,640 ₹2,128
Net salary at the rank of secretary (level-17)
Due Drawan diff
Basic pay ₹2,25,000 ₹2,25,000
DA ₹63,000 ₹38,250
TA ₹15,750 ₹15,750
DA on TA ₹4,410 ₹2,678
₹3,08,160 ₹2,81,678 ₹26,482
Net difference of pay between level 17 and level 1 = ₹26,482-₹2,128 = ₹24,354
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