Cabinet approves 3% Dearness Allowance (DA) hike for Central government employees

• After factoring in the increase, the Dearness Allowance (DA) for Central government employees now stands at 31 percent
• The DA hike will benefit about 47.14 lakh Central government employees and 68.62 lakh pensioners

New Delhi: Ahead of the festive season, the government has approved a three percent hike in Dearness Allowance (DA) for Central government employees, with effect from July 1, 2021, said an official statement on Thursday. "The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today has approved to release an additional instalment of Dearness Allowance to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1.7.2021 representing an increase of 3 percent over the existing rate of 28 percent of the Basic Pay / Pension, to compensate for price rise," said the statement.

DA hike to benefit 47.14 lakh government employees

The DA hike will benefit about 47.14 lakh Central government employees and 68.62 lakh pensioners, said the statement. "The increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission," the statement added. The combined impact on the exchequer on account of both DA and Dearness Relief (DR) would be Rs 9,488.70 crore per annum.

After factoring in the increase, the Dearness Allowance (DA) for Central government employees now stands at 31 percent.

Last DA hike was announced in July this year

The last hike in DA and DR was announced by the Central government earlier in July this year. At the time, the Centre had increased the allowance from 17 percent to 28 percent, with effect from July 1, 2021. DA and DR are usually hiked by three percent but the government had decided to raise it by 11 percent because hikes had been deferred in the wake of the COVID-19-induced revenue shortfall.  

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)