Diwali gift to Central govt employees: 5% Hike in DA

New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi approved an increase of 5% in the dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners. The hike in the DA and DR will be applicable with effect from July 1, 2019.  In January 2019 the DA was hiked by 12% of the Basic pay/pension, to compensate for price rise.  The DA of the central government employees is reviewed and revised twice every year, in January and July. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7^th Central Pay Commission.

The burden of 16k on the exchequer

The combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 15909.35 crore per annum. For the current financial year, the decision will increase the burden of Rs 10606.20 crore.

The hike in the DA and DR will be applicable with effect from July 1, 2019.  In January 2019 the DA was hiked by 12% of the basic pay and pension, to compensate for the price rise.  The DA of the central government employees is reviewed and revised twice every year, in January and July

The decision that is being seen as Modi government's yet another effort to give a push to the decelerated economy will benefit about 49.93 lakh employees and 65.26 lakh pensioners.

What are DA and DR?

Dearness allowance and dearness relief are paid to the central government employees and pensioners to adjust the cost of living and to protect their basic pay or pension from erosion in the real value. An employee gets a DA and ex-employee, or a pensioner gets a DR.

Pushing the Bull

The Government has undertaken several steps to increase production and boost credit but no visible steps had been taken to give a thrust ti buying. This step is being seen as the one putting money into the pockets of around 1.2 crore families which will give a push to purchase this festive season.