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The Union Cabinet, on Wednesday, approved an increase in dearness allowance (DA) by 5 per cent with effect from July 1. The new rate of DA will be 17 per cent. The existing rate is 12 per cent.
The Cabinet meeting was chaired by Prime Minister Narendra Modi.
The arrears for three months, and DA at higher rate for the current month, will be paid along with salary and pension of October, which is to be paid at the end of this month.
Information and Broadcasting Minister Prakash Javdekar said that new rate will benefit 50 lakh present employees and officers and nearly 62 lakhs pensioners. Total additional expenditure will be Rs 16000 crore.
PTI adds:
“This is the highest ever 5 percentage points increase in DA in one go by the central government,” he said, adding this will bring cheers to the government employees on the eve of Diwali.
This increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.
Beginning January 2019, the government had raised the DA/DR to 12 per cent from 9 per cent earlier. The government said the combined impact on the exchequer on account of both DA and DR would be Rs 15,909.35 crore per annum and Rs 10,606.20 crore in financial year 2019-20 (for a period of eight months from July 2019 to February 2020). This will benefit about 49.93 lakh central government employees and 65.26 lakh pensioners.
The additional financial implication on account of this increase in DA is estimated at Rs 8,590.20 crore per year; and Rs 5,726.80 crore in the current financial year (from July 2019 to February 2020). The additional financial implication on account of the DR to pensioners is estimated to be Rs 7,319.15 crore per annum and Rs 4,870 crore in the current fiscal.
DA/DR is paid to central government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value.
These are revised twice a year from January 1 and July 1.
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