Just a day before the festival of colors in India, Central Government announced increase in dearness allowance by 6 per cent. It will provide the relief to over 1 crore employees and pensioners of central government as their DA becomes 125% of their basic pay.
“Cabinet has decided to hike DA by 6 per cent for central government employees and pensioners,” union minister Ravi Shankar Prasad briefed the media.
The combined impact on the exchequer on account of both DA and Dearness Relief would be of Rs 6,796.50 crore per annum and Rs 7,929.24 crore respectively, in 2016-17 (for a period of 14 months from January, 2016 to February, 2017), said the minister.
The decision to release an additional installment of DA to central government employees and Dearness Relief (DR) to Pensioners from January 1, 2016, was taken here today by Union Cabinet, chaired by Prime Minister Narendra Modi.
This represents an increase of 6 percentage points over the existing rate of 119 percent of the Basic Pay/Pension, to compensate for price rise, the government said in an official release.
The DA, which will benefit 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 per cent to 125 per cent.
Dearness Allowance is paid as a portion of basic pay of employees to neutralise the impact of inflation. Pensioners get Dearness Relief.
The Centre revises DA twice a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.
In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015.
In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.