The Centre raised the dearness allowance for government employees and pensioners by 4 per cent on Wednesday. According to Union Minister Anurag Thakur, the dearness allowance is now up to 38 per cent.
The revised dearness allowance will go into effect on July 1 and be paid in arrears to government employees and pensioners. The Centre usually implements DA hikes in January and July but announces them in March and September.
Union Minister Anurag Thakur added that the government had allocated Rs 12,852 crore to benefit over 50 lakh government employees and approximately 62 lakh pensioners ahead of the holiday season.
The latest increase brings the DA to 38 per cent, up from 34 per cent. A 4 per cent increase in DA equates to an increase in salary of Rs 720. For example, if a central government employee’s basic salary is Rs 18,000, he is entitled to Rs 6,120 in DA under 34 per cent.
The employee will receive Rs 6,840 with the 4 per cent increase when the DA reaches 38 per cent. That is, he will receive an additional Rs 720.
According to economists, the additional amount is likely to stimulate demand during the holiday season, particularly for consumer durables.
The central government did not pay its employees DA for 18 months, from January 1, 2020, to June 30, 2021. Employees have been requesting payment for quite some time.
The Union Cabinet approved a 3 per cent increase in Dearness Allowance (DA) in March, with effect from January 1, 2022. The government also agreed to give pensioners an additional Dearness Relief (DR) instalment.
In addition to the DA increase, the Union Cabinet has approved a 78-day Productivity Linked Bonus for non-gazetted railway employees.
Dearness allowance is a component of central government employees’ monthly salary paid to compensate for increases in the cost of living due to compensation.