Govt hikes DA rate for employees and pensioners to 90%

The central government will increase the dearness allowance rate for its more than 5 million employees and 3 million pensioners to 90 per cent, from the existing 80 per cent, which would involve an additional expenditure of Rs10,879.60 crore per annum to the exchequer.

The hike, which is effective from 1 July this year, would cost the government Rs7,253.10 crore in the financial year 2013-14 (for a period of 8 month from July 2013 to February 2014).

The combined impact on the exchequer on the increase in both the dearness allowance and dearness relief would be of the order of Rs10,879.60 crore per annum, an official release said today.

The union cabinet today approved the proposal to release an additional instalment of DA to central government employees and dearness relief (DR) to pensioners with effect from 1 July 2013, at the rate of 10 percentage points above the existing rate of 80 per cent.

This is the second time the government is raising dearness allowance for its employees and pensioners during the current financial year amidst a steady increase in price levels.

The government had, in April 2013, increased the DA for central staff to 80 per cent, effective 1 January, this year.

The government uses consumer price index for industrial workers (CPI-IW) data for the past 12 months to arrive at a number for the purpose of any DA hike.

The retail inflation for industrial workers between July 2012 and June 2013 was used to compute the increase in DA, according to a government release.

The increase is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission, the release stated.