Centre hikes dearness pay of employees, pensioners by 6 percentage points to 125%

The government today announced an increase in the dearness allowance of central government employees and dearness relief to central government pensioners by 6 percentage points from 119 per cent to 125 per cent, in a step that would benefit over 10 million people.

The dearness pay hike that will benefit 5 million employees and 5.8 million pensioners will cost the exchequer over Rs14,725 crore during a 14 month period from 1 January 2016.

The union cabinet, chaired by Prime Minister Narendra Modi approved release of an additional installment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from 1 January 2016. This represents an addition of 6 per cent of the basic pay/pension to the existing rate of 119 per cent, to compensate for price rise.

This will benefit about 5 million government employees and 5.8 million pensioners, an official release stated.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission (CPC). The combined impact on the exchequer on account of both dearness allowance and dearness relief would be of Rs6,796.50 crore and Rs7,929.24 crore respectively, per annum, in the financial year 2016-17 (for a period of 14 months from January 2016 to February 2017).

Announcing the DA hike after the cabinet meeting, minister Ravi Shankar Prasad described it as 'a Holi gift' for the employees and hoped that it would ease the pressure on the middle class households.