The Union Cabinet has approved an increase of two percentage point in Dearness Allowance (DA) for Central Government employees and Dearness Relief for pensioners with effect from July 1. The decision is meant to compensate them for price rise in the economy.
According to the official release, the compounding impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 6112.20 crore per annum and Rs.4074.80 crore in the financial year 2018-19.
This increase is per the accepted formula, based on the recommendations of the 7th Central Pay Commission. The DA is a cost of living adjustment allowance paid to government employees and pensioners. It is adjusted according to the economic trends to reduce the impact of inflation on government employees.
Earlier reported in People Matters, In July, the central government was modifying the index and base year that is used for calculating dearness allowance. The modification was expected to lead to an increase in the salary of central government employees and pensioners. The move was aimed to impact about 11million employees and pensioners.