The union government cabinet on Wednesday approved an additional 2 per cent increase in dearness allowance (DA) and dearness relief (DR) for central government employees. The approved hike will come into effect from 1st July, 2018.
The official government press released states, ‘The union government cabinet, chaired by Prime Minister Narendra Modi has approved to release an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f 01.07.2018 representing an increase of 2%.” The increment will be added to the existing 7% of the Basic pay/Pension, making it 9% of the basic pay. The government has stated the cause for this increment to be the price rise. It is worth mentioning that the increase is in accordance with the formula prescribed by the 7th Central Pay Commission.
It is estimated that around 48.41 lakh central government employees and 62.03 lakh pensioners would be benefitted by this hike. The impact on the exchequer is estimated to around Rs. 6,112.02 crores for Dearness Allowance and Rs. 4,074.80 crore in the financial year 2018-19.
In March this year, the central cabinet approved an increase of the same percentage in DA and DR. With the new increase the DA and DR percentage has reached 9% for all central government employees from 5% in March this year. This government has also shown initiative to increase pension for the organized sector employees and under different central government schemes.