Ahead of Diwali, Centre to announce 2% dearness allowance for staff, pensioners

50 lakh central employees, 58 lakh pensioners will be benefited from the announcement

In what could bring cheers to 50 lakh central employees and 58 lakh pensioners ahead of Diwali, the Centre is all set to announce 2% dearness allowance to be effective from July 1, 2016.

"The proposal to provide 2% dearness allowance and dearness relief to central government employees and pensioners respectively, is listed on agenda of the Union Cabinet meeting scheduled for tomorrow," a source said.

Dearness allowance and dearness relief is provided to employees and pensioners to neutralise the impact of price rise on their earnings.

Earlier this year the government hiked Dearness Allowance by 6% to 12.5% of the basic pay. The DA was later merged into the basic pay following implementation of 7th Pay Commission award.

The central government employee unions want that the DA should be increased by 3% and not 2% which is being considered by the centre.

President of Confederation of Central Government Employees K K N Kutty told PTI, "The 12-month average of Consumer Price Index for Industrial Workers from July 1, 2015 to June 30, 2016, works out to be 2.92%. Therefore the unions had pressed for 3% DA. We are not satisfied with this."

As per the agreed formula, government increases DA on the basis of 12-month average of the retail inflation and does not consider the price rise rate beyond decimal point for deciding the rate of dearness allowance.