The Union Cabinet approved two per cent hike in Dearness Allowance (DA) for central government employees on Wednesday. This decision will see 1.10 crore central government staff and pensioners receive 7 per cent of their basic pay as DA, instead of 5 per cent. The hike will be put into effect from January 01, 2018.
The Dearness Allowance hike is expected to benefit 48.41 lakh central government employees and 61.17 lakh pensioners. Dearness Allowance and Dearness Relief are given to employees and pensioners respectively to curb the effect of inflation on their earnings. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, a government statement said.
"The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to release an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners from January 1, 2018, representing an increase of 2 per cent over the existing rate of 5 per cent of the Basic Pay/Pension, to compensate for price rise," the statement further added.
This hike in DA and DR together will put additional burden of Rs 6,077.72 crore on the state exchequer every year. This financial pressure will reach Rs 7,090.68 crore during the 14-month period between January 2018 and February 2019.
Meanwhile, central government employees are still waiting for increase in their basic pay under 7th Pay Commission. The employee unions have been demanding a hike in fitment factor from 2.57 to 3. This would take their basic hike from 18,000 to 21,000.