The Union Cabinet on Wednesday approved an increase of 2% in the dearness allowance (DA) over the existing rate of 7% for the central government employees. Thus, the increase of 9% will be effective from July.
This will benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners.
“The Union Cabinet has approved to release an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2018 representing an increase of 2% over the existing rate of 7% of the Basic Pay/Pension, to compensate for price rise,” an official statement said after the Cabinet meeting.
In March, the government had increased dearness allowance to 7% from 5%.
The combined impact on the exchequer on account of both DA and DR would be Rs 6,112.20 crore per annum and Rs 4,074.80 crore in the financial year 2018-19 (for a period of 8 months from July, 2018 to February, 2019), the statement said.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, it said.