Centre to hike DA from 80% to 90% for employees, pensioners

Close on the heels of two popular measures like the Food Security Bill and the Land Acquisition Bill, the central government will this month announce a 10-percentage point increase in the rate of dearness allowance to nearly 5 million employees and 3 million pensioners.

The new DA rate will go up to 90 per cent of basic salary from the existing 80 per cent, benefiting a total of about 8 million employees and pensioners.

The revision is on account of the increase in living costs based on the revised all India consumer price index for industrial workers (CPI-IW) for June, official sources said, adding that the revised DA rate would be effective from 1 July this year.

Consumer price inflation for factory workers for June was higher at 11.63 per cent, against the provisional estimate of 11.06 per cent for the month released on 31 July, as per revised data released on 30 August.

The finance ministry is expected to prepare a proposal for the DA hike for seeking cabinet approval this month.

The double-digit hike in DA comes after a gap of about three years, since the government had, in September 2010, announced a 10-per cent increase in DA rates with effect from 1 July 2010.

This is the second time the government is increasing the DA rate after the 8 percentage point hike from 72 per cent to 80 per cent in April 2013, effective 1 January 2013.

While a final decision is yet to be taken, sources say, the hike is most likely considering the price level and the coming elections in 2014.