Festive bonus: Cabinet approves hike in DA to 46% from 42% for Central govt employees, pensioners

Amid the ongoing festive season, the Union Cabinet on Wednesday approved a 4 per cent Dearness Allowance (DA) hike for central government employees, Union Minister Anurag Thakur said on Wednesday .

Sources told India Today that the Centre was all set to approve the 4 per cent DA hike after today's Union Cabinet meeting. 

With this decision, the DA for central government employees will increase to 46 per cent from the existing 42 per cent. This hike would be effective from July 1, 2023.

In March this year, the Union Cabinet had increased the dearness allowance and dearness relief by 4 per cent to 42 per cent. I&B Minister Anurag Thakur said that the combined impact on the exchequer would be Rs 12,815.60 crore per annum. The hike was effective from January 01, 2023.

The Cabinet had also hiked additional DA by 4 per cent in September last year, just weeks before Diwali. 

Dearness Allowance (DA) can be defined as a cost-of-living adjustment allowance provided to public sector employees by the government. It is calculated on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW).

There is a fixed formula for calculating dearness allowance of central government employees and pensioners.

For Central Government Employees

DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100 

For Public Sector Employees

DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100

The announcement is likely to benefit 47 lakh employees and 68 lakh pensioners.

The Cabinet has also approved providing a 78-day salary as a bonus equivalent to non-gazetted Railway employees. As many as 11.07 lakh employees are likely to benefit by this action.

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