In what comes as a major relief for government employees, the Union Cabinet on Wednesday approved the release of an additional instalment of Dearness Allowance to central government employees and Dearness Relief to pensioners with effect from January 1, 2019. This will involve an increase of 3% over the existing rate of 9% of the basic pay or pension.
“The Union Cabinet has given its approval to the release of an additional instalment of Dearness Allowance (DA) to Central Government employees, and Dearness Relief (DR) to pensioners w.e.f. 1.1.2019 representing an increase of 3% over the existing rate of 9% of the Basic Pay/Pension, to compensate for price rise,” the government said in a release.
The government said that the combined impact of the hike in dearness allowance and dearness relief will amount to Rs 9,168.12 crore per annum and Rs 10,696.14 crore in the financial year 2019-20 (for a period of 14 months from January 2019 to February, 2020). This will benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners, it added.
The increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission (CPC).
The government had last increased the dearness allowance in August last year when it approved an increase of 2% in dearness allowance for central government employees over the rate of 7%, effective from July 1, 2018.
Previously, the Cabinet had increased dearness allowance in March 2018, from 5% to 7% in accordance with the recommendations of the 7th Central Pay Commission.
Dearness allowance is provided as an adjustment to compensate for the increase in the cost of living due to inflation. Computed as a component of the salary, it is a percentage of the employee’s basic salary.