Dearness Allowance hike to 31% effective from July 1: FinMin

The decision will benefit millions of central government employees and pensioners

Dearness Allowance for central government employees has been hiked to 31 per cent of the basic pay from 28 per cent with effect from July 1, 2021, the Finance Ministry said.

In an office memorandum, the Department of Expenditure, under the Finance Ministry, said the term 'basic pay' means the pay drawn as per the 7th pay commission matrix and does not include any other type of pay like special pay, etc.

"....the Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 28 per cent to 31 per cent of the basic pay with effect from July 1, 2021," said the office memorandum dated October 25.

 

The hike will also apply to civilian employees paid from the Defence Services, while in respect of Armed Forces personnel and Railway employees, separate orders will be issued by the Defence and Railways Ministry, respectively.

The Union Cabinet had last week approved a 3 per cent hike in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners over the 28 per cent existing rate.

The decision will benefit about 47.14 lakh central government employees and 68.62 lakh pensioners.

In July this year, and DA rate was increased from 17 per cent to 28 per cent. With a 3-per cent hike now, the DA rate will become 31 per cent.

The combined impact on the exchequer on account of the Dearness Allowance and Dearness Relief would be Rs 9,488.70 crore.

Following the COVID pandemic outbreak, the government had frozen the three additional instalments of the DA and DR, which were due from January 1, 2020, July 1, 2020, and January 1, 2021. The freeze was lifted from July 1, 2021, and the DA, DR rate was hiked by 11 percentage points to 28 per cent.