Central staff, pensioners to get 5% additional DA from July

The central government on Wednesday announced a hike equivalent to 5 per cent of basic pay and allowances of central government employees and pensioners, in a Diwali gift. The decision will take the rate of dearness allowance for the employees and pensioners from 12 per cent to 17 per cent.

The union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the release of an additional instalment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners, representing an increase of 5 per cent over and above the existing rate of 12 per cent of the basic pay/pension, to compensate for price rise, effective 1 July 2019.
Announcing the decision after the cabinet meeting union minister Prakash Javadekar said the hike in DA by 5 per cent means the dearness allowance has been increased from 12 per cent to 17 per cent.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission and will benefit about 4.99 million central government employees and 6.53 million pensioners.
The additional payment of dearness allowance will have an annual financial implication on the exchequer estimated at Rs8,590.20 crore and Rs5,726.80 crore in the current financial year (July 2019 to February 2020).
The additional financial implication on account of the dearness relief to pensioners is estimated to be Rs7,319.15 crore per annum and Rs4,870 crore in the current fiscal.
Dear allowance/dearness relief is paid to central government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value. Dearness allowance/dearness relief is revised twice a year – on 1 January and 1 July.