Dearness Allowance (DA) hike for central government employees effective from July 1

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 percentage points from 28% on Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. After this hike, the DA will increase to 31 per cent. The hike comes into effect from July 1, 2021, Union Minister Anurag Thakur announced at a press briefing in New Delhi.

The new hike comes a few days before Diwali and is aimed at benefiting over 47 lakh employees and 68.62 lakh pensioners. The combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 9,488.70 crore per annum, the government said in a statement.

DA and DR installments are payable for four periods i.e. January 1, 2020, July 1, 2020, January 1, 2021 and July 1, 2021.

The government had stopped all such hikes last year as the coronavirus dented its revenue. Due to increase in DA of central government employees, the government has almost ₹34,400 crore annually.

In July this year, the DA rate was increased from 17 per cent to 28 per cent. Now with an increase of 3 per cent, the DA rate will be 31 per cent.