The Union Cabinet is likely to increase dearness allowance by 4 per cent, said sources. The last increase in dearness allowance was announced in March, with effect from January 1, 2022. The March increase was 3 per cent over the previous rate of 31 per cent. A 4 per cent increase will amount to a dearness allowance of 38 per cent.
In the announcement in March, the government stated that Prime Minister Narendra Modi approved the increase in dearness allowance (DA) and dearness relief (DR) to pensioners, representing a 3 per cent increase over the existing 31 per cent of the basic pay/pension to compensate for increasing prices.
The increase is based on recommendations of the 7th pay commission.
The government had raised the DA and DR for central government employees from 17 per cent to 28 per cent in July 2021, after a long period. In October 2021, the DA was increased by another 3 per cent, which took it to 31 per cent.
Calculated as a percentage of the basic salary, DA is paid keeping increasing inflation and prices in mind. This component of the salary for government employees and pensioners, is aimed at soothing the impact of inflation.
The Cabinet Committee on Economic Affairs (CCEA) is scheduled to meet at 11 am on Wednesday.
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