Union Cabinet Approves 2% DA Hike for Central Government Employees
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Synopsis
The Union Cabinet has sanctioned a 2% increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, effective from January 1. This change will benefit millions and incur a significant financial impact on the government.
Key Takeaways
- 2% increase in DA for Central Govt employees
- 66.55 lakh pensioners set to benefit
- Annual impact on exchequer: Rs 6614.04 crore
- 8th Pay Commission initiated in January
- Final revision before commission's deliberations
New Delhi, March 28 (NationPress) The Union Cabinet sanctioned a two per cent increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners effective from January 1.
This adjustment is set to aid approximately 48.66 lakh Central Government employees and 66.55 lakh pensioners, as stated in the official announcement.
The overall financial impact on the government due to this adjustment in DA and DR will amount to Rs 6614.04 crore annually.
The revision in DA and DR was anticipated, as one of the two biannual increases in these allowances is typically revealed in March, followed by the other in October, just before Diwali.
The DA rise is a predicted 2 per cent, aligned with inflation metrics derived from the consumer price index for industrial workers, which has shown a decrease this year compared to last year when it was elevated by 3 per cent in October and 4 per cent in March.
After the 3 per cent increase last October, the DA stood at 53 per cent of the basic pay.
With the current 2 per cent increase in DA, the allowance has now escalated to 55 per cent of the basic pay.
The government has also initiated the 8th Pay Commission, which received approval from the Centre in January of this year, aimed at reviewing wages and allowances for central government employees.
The formal establishment of the commission, which will include appointing a chairman and at least two members, is anticipated shortly.
While DA and DR will continue to be updated biannually, this may likely be the final adjustment before the commission begins its discussions with various stakeholders.
Employee forums have also requested the merging of these two components with the basic salary before the next pay commission report is implemented.
Under the 5th Pay Commission, the guideline was to combine basic pay with DA once the primary allowance exceeded 50 per cent. The government had previously merged DA with basic pay in 2004. However, this practice was halted under the following 6th and 7th Pay Commissions.
