Bringing cheers to 50 lakh central government employees and 65 lakh pensioners ahead of Diwali, the Cabinet on Wednesday announced an increase of 5 percentage points to 17 per cent in dearness and relief allowances, envisaging an additional annual outgo of Rs 16,000 crore.
The Cabinet approved releasing an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners with effect from July 1, 2019 representing an increase of 5 percentage points over the existing rate of 12 per cent of the basic pay/pension, to compensate for price rise, an official statement said.
This increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.
"This is the highest ever 5 percentage points increase in DA in one go by the central government," Information and Broadcasting Minister Prakash Javadekar said while briefing media on the decisions taken by the Cabinet, adding this will bring cheers to the government employees on the eve of Diwali.
The Cabinet meeting was chaired by Prime Minister Narendra Modi.
Beginning January 2019, the government had raised the DA/DR to 12 per cent from 9 per cent earlier.
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The government said the combined impact on the exchequer on account of both DA and DR would be Rs 15,909.35 crore per annum and Rs 10,606.20 crore in financial year 2019-20 (for a period of eight months from July 2019 to February 2020).
This will benefit about 49.93 lakh central government employees and 65.26 lakh pensioners.
The additional financial implication on account of this increase in DA is estimated at Rs 8,590.20 crore per year; and Rs 5,726.80 crore in the current financial year (from July 2019 to February 2020).
The additional financial implication on account of the DR to pensioners is estimated to be Rs 7,319.15 crore per annum and Rs 4,870 crore in the current fiscal.
DA/DR is paid to central government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value.
These are revised twice a year from January 1 and July 1.