Dearness Allowance hiked to 7% from 5% for Central government employees and pensioners

The increase in DA will benefit about 48.41 lakh Central government employees and 61.17 lakh pensioners.

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New Delhi: The Union Cabinet on Wednesday increased the Dearness Allowance (DA) for Central government employees and pensioners to 7 percent, from 5 percent, from January 1, 2018.

It will benefit about 48.41 lakh central government employees and 61.17 lakh pensioners.

"The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to release an additional instalment of Dearness Allowance (DA) to Central government employees and Dearness Relief (DR) to pensioners from January 1, 2018, representing an increase of 2 percent over the existing rate of 5 percent of the basic pay/pension, to compensate for price rise," an official statement said.

It added that 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 2018-19 (for a period of 14 months from January 2018 to February 2019).

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, the statement said, as per PTI.

Earlier, in September 2017, the Union Cabinet had approved a 1% hike in DA and DR and has raised it to 5% for its employees and pensioners.

The DA/DR had been hiked at that time over the existing rate of 4 percent of the basic pay/pension.

The hike in the DA hike is as per the agreed methodology of taking an average of Consumer Price Index-Industrial Workers for the past 12 months.

(With Agency inputs)