President Pranab Mukherjee has given his approval to payment of a 2 per cent dearness allowance (DA) to central government employees.
The move will benefit about 50.68 lakh employees and 54.24 lakh pensioners.
The decision to provide 2 per cent DA on basic pay was earlier approved by the Union Cabinet and will be applicable from July 1.
The DA will result in an annual burden of Rs 5,622.10 crore.
"Consequent upon the decision taken by the government on recommendations of the 7th Central Pay Commission relating to DA, the President is pleased to decide that the DA to all categories of the central government employees shall be admissible at the rate of 2 per cent of basic pay per month, w.E.F 1.7.2016," the Finance Ministry said.
The revised pay structure, effective January 1, 2016, includes the DA of 125 per cent sanctioned from that date in the pre-revised pay structure.
Thus, DA in the revised pay structure is zero from January 1, 2016.
The ministry further said till a final decision on allowances is taken based on recommendations of the committee constituted under the chairmanship of the finance secretary and the expenditure secretary, "all allowances will continue to be paid at existing rates".
"The DA will continue to be a distinct element of remuneration...," it added.
The ministry further said the orders will also apply to the civilian employees paid from the Defence Services Estimates.
"In respect of armed forces personnel and railway employees, separate orders will be issued by the Ministry of Defence and Ministry of Railways, respectively," it said.
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