Union Cabinet, led by Prime Minister Narendra Modi, has approved an additional instalment of Dearness Allowance (DA) and Dearness Relief (DR) for Central Government employees and pensioners. Effective from July 1, 2024, this increase will provide a 3% hike over the existing rate of 50% of the basic pay or pension. The move is aimed at compensating for rising inflation and mitigating the effects of price increases on government employees and pensioners.
Dearness Allowance is a cost of living adjustment provided to public sector employees, calculated as a percentage of their basic salary to counter inflation. Similarly, Dearness Relief supports pensioners and family pensioners in managing inflationary pressures on their fixed incomes. These adjustments vary based on location, with different rates applied to rural, urban, and semi-urban employees, reflecting the cost of living differences.
The latest increase in DA and DR follows the recommendations of the 7th Central Pay Commission, ensuring that it aligns with inflationary trends and economic conditions. The decision will benefit approximately 49.18 lakh central government employees and 64.89 lakh pensioners, ensuring financial support in the face of rising prices. The financial burden on the exchequer due to this increase is estimated at Rs. 9,448.35 crore annually.
The hike, announced ahead of Diwali, brings festive cheer to government employees and pensioners. It is noteworthy that states such as Himachal Pradesh and Chhattisgarh have already extended a festive bonus to their state employees by raising Dearness Allowance (DA) by 4% in anticipation of Diwali.
