The Union Cabinet on Wednesday approved release of an additional instalment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners from January 1, 2018 taking a hit of over Rs 15,000 crore over the next 14 months.
DA and DR are provided to employees and pensioners to neutralise the impact of inflation on their earnings. This will represent an increase of 2 per cent over the existing rate of 5 per cent of the Basic Pay/Pension, to compensate for price rise. The move will benefit about 48.41 lakh Central government employees and 61.17 lakh pensioners.
The combined impact on the exchequer on account of both DA and DR would be Rs 6,077.72 crore per annum and Rs 7,090.68 crore in the financial year 2018-19 (for a period of 14 months from January, 2018 to February, 2019). In September last year, the Modi government raised the DA for government employees from 4 per cent to 5 per cent.