The Union Cabinet last week approved a 3% hike in dearness allowance for central government employees.
The Finance Ministry said that dearness allowance for central government employees has been increased from 28% to 31% of basic pay with effect from July 1, 2021.
In an office memorandum, the Department of Expenditure under the Ministry of Finance said, the term ‘basic pay’ means the pay drawn as per the Seventh Pay Commission matrix and does not include any other kind of pay like special pay etc.
“…Dearness Allowance payable to Central Government employees will be increased from existing 28 per cent to 31 per cent of basic pay with effect from July 1, 2021,” the office memorandum issued on October 25 said.
The hike will also be applicable to civilian employees drawn from defense services, while separate orders will be issued by the Defense and Railways ministries in respect of Armed Forces personnel and Railway employees respectively.
The Union Cabinet last week approved a hike of 3% in Dearness Allowance (DA) for central government employees and 28% in Dearness Relief (DR) for pensioners, over and above the existing rate.
This decision will benefit about 47.14 lakh central government employees and 68.62 lakh pensioners.
In July this year, the DA rate was increased from 17 per cent to 28 per cent. Now with a hike of 3%, the DA rate will become 31%.
The combined impact on the exchequer on account of dearness allowance and dearness relief would be ₹9,488.70 crore.
Following the outbreak of the COVID pandemic, the government had put on hold three additional installments of DA and DR, which were due from January 1, 2020, July 1, 2020 and January 1, 2021. The freeze was lifted with effect from July 1, 2021, and the DA, DR rate increased by 11 percentage points to 28%.
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