Cabinet approves 3% hike in Dearness Allowance; now stands at 53%

2 min read Last Updated : Oct 16 2024 | 4:36 PM IST

Ahead of the festive season, the Union Cabinet on Wednesday approved an additional instalment of Dearness Allowance (DA) for central government employees and increased the Dearness Relief (DR) for pensioners by three percentage points to 53 per cent, compensating against price rises.

“This increase is in accordance with the accepted formula, based on the recommendations of the 7th Central Pay Commission,” a press statement issued by the government said.

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Dearness Allowance and Dearness Relief are paid to central government employees and pensioners to adjust the cost of living and to protect their basic pay or pension from erosion in real value.

These allowances are revised twice a year, on January 1 and July 1, based on the increase in the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW), published by the Labour Bureau.

The combined impact on the exchequer due to the DA and DR increases would be Rs 9,448.35 crore per annum, according to the press statement.

The increase will benefit about 4.9 million central government employees and 6.5 million pensioners.

The last revision in DA was announced in March, with effect from January 2024. At that time, the allowance was raised by 4 percentage points, making central government employees eligible for DA of 50 per cent of their basic salary, while pensioners received DR of 50 per cent of their basic pension.

First Published: Oct 16 2024 | 4:35 PMIST