Centre clears 6% DA hike for employees, pensioners

The Centre on Wednesday increased dearness allowance (DA) for its employees by six per cent of their basic pay with effect from July, a move that will hit the exchequer by Rs 4,436.76 crore in the remaining months of the current financial year and Rs 6,655.14 in a year.

The Cabinet decision to increase dearness allowance for central government to 119 per cent from 113 per cent is a move that will benefit five million employees and 5.6 million pensioners.

"Every six months, the government reviews dearness allowance. This time, we have decided to increase DA by six per cent over existing 113 per cent rate," Finance Minister Arun Jaitley told reporters after Union Cabinet meeting here.
 

The DA rate increase is based on an average of 12-month consumer price index-industrial workers (CPI-IW) from July 1, 2014 to June 30, 2015. This is in line with the 6th Pay Commission.

In April, the government had hiked DA by six per cent to 113 per cent of their basic pay with effect from January.

Jaitley said the 7th Pay Commission will shortly submit its report to the government and will consider this amount of DA in its recommendations. Recently, its term was extended till December 31.

The commission was constituted in February 2014 and was to submit its recommendations within 18 months.

DEARNESS RELIEF

• Allowance to central government employees and dearness relief to pensioners from July 1, 2015. This represents an increase of 6% over the existing rate of 113% of the basic pay/pension, to compensate for price rise
   
• The decision will benefit about 5 million government employees and 5.6 million pensioners
   
• The combined impact on the exchequer on account of both DA & DR will be Rs 6,655.14 cr per annum, and Rs 4,436.76 cr in the financial year 2015-16 (a period of eight months from July, 2015 to February, 2016)
   
• The DA rate increase is an average of 12-month consumer price index-industrial workers from July 1, 2014 to June 30, 2015