Cabinet approves release of an additional 3% DA and DR to central govt staff, pensioners

The union cabinet on Thursday approved the release of an additional instalment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from 1 July 2021, representing an increase of 3 per cent over the existing rate of 28 per cent of the basic pay / pension, to compensate for price rise.
The fresh hike will take the DA payable to central government employees to 31 per cent.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.  The combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs9,488.70 crore per annum.  This will benefit about 4.71 million central government employees and 6.86 million pensioners.
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 25 October.
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 railway ministry, respectively.
The new hike comes just days ahead of Diwali.
The DA and DR instalments are due for four periods from 1 January 2020, 1 July 2020, 1 January  2021 and 1 July 2021.
The government had frozen all such hikes last year as coronavirus had dented its revenue. The DA hike for central government employees is likely to cost the government about Rs34,400 crore annually.
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.