The Union Cabinet on Friday approved 4 per cent hike in dearness allowance (DA) to 21 per cent for central government employees and pensioners, costing the exchequer an additional Rs 14,595 crore.
Briefing the media, I&B Minister Prakash Javadekar said that the Union Cabinet has approved an increase of 4 per cent hike in DA to 48 lakh government employees and 65 lakh pensioners.
The increased dearness allowance comes into effect from January 1, 2020.
This is over the existing rate of 17 per cent of the Basic Pay/Pension.
The hike of 4 per cent means that the monthly salary of central government employees’ will go up by Rs 720 to Rs 10,000 per month.
In October last year, the Union Cabinet had cleared 5 per cent hike in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) to pensioners, increasing it from 12 per cent to 17 per cent.
The Dearness Allowance (DA) is a cost of living adjustment allowance paid to government employees, public sector employees (PSE) and pensioners. It is calculated as a percentage of an Indian citizen’s basic salary to mitigate the impact of inflation on people.
Dearness Allowance/Dearness Relief is based on the rise in inflation and increase in prices of essential commodities.
DA is announced twice in a year and its tenor is January to June and July to December every year.