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7th Pay Commission bonanza: 3% Dearness Allowance hike taking the rate to 12% of basic pay

This is the second time in six months that the Centre has released an additional instalment of Dearness Allowance to central government employees.

twitter-logoBusinessToday.In | February 22, 2019 | Updated 18:29 IST
7th Pay Commission bonanza: 3% Dearness Allowance hike taking the rate to 12% of basic pay

The pre-election sops season continues to bring cheer to citizens. The Centre has now increased the Dearness Allowance (DA) by 3% over the existing rate of 9% with retrospective effect from January 1, 2019. Similarly, the Dearness Relief (DR) for pensioners has also gone up.

The decision, taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi yesterday, will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners.

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This increase is in accordance with the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission, said a government release.

DA is a cost of living adjustment allowance - adjusted in line with inflation to compensate for price rise - that is calculated as a fixed percentage of a person's basic salary or pension. It is pegged to the All India Consumer Price Index (Industrial Workers). India, Pakistan and Bangladesh are reportedly the only countries where government employees are given such an allowance.

According to the government, the combined impact on the exchequer on account of the increased DA and DR would be Rs 9168.12 crore per annum. For the 14-month period from January 2019 to February 2020, the latest hike will produce a bill of Rs 10,696.14 crore.

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This is the third time in a year that the Centre has revised the DA and DR. Previously, in March 2018, it had been pushed up by 2% followed by a further 2% hike in August.

Given that the central government employees have not been completely satisfied with the pay hike mandated by the 7th Central Pay Commission - demands to increase the fitment factor for basic pay under the pay panel have been unsuccessfully raised by employee unions several times - this could be the Modi government's play at partial appeasement with an eye on the 2019 Lok Sabha and state assembly elections.

In the past month, two other major announcements were made under the 7th Pay Commission - a 300% hike in the allowance for the central government employees handling cash and treasury and over 200% increase in the running allowance for the railway employees.

Read More: 7th Pay Commission: Could central govt employees get pay hike before 2019 General Elections?

7th Pay Commission: Government employees may soon get pay hike

With PTI inputs

Edited by Sushmita Agarwal

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