7th Pay Commission: Govt employees' DA hiked by another 3%, cabinet gives nod

New Delhi: The Union cabinet has given approval for 3 percent hike in Dearness Allowance (DA) for the central government under the 7th pay commission.

With this recent rise, DA will be 34% of the basic income. Over 50 lakh government employees and 65 lakh pensioners will profit from this move.

Dearness Allowance (DA) and Dearness Relief (DR) to Central Government Employees and Pensioners are calculated on the basis of the rate of inflation as per All India Consumer Price Index for Industrial Workers (AICPI0IW), released by Labour Bureau, M/o of Labour and Employment.

The average retail inflation rate for the October-December quarter of 2021 was 5.01 percent, but it jumped to 6.07 percent in February of this year.

It may be recalled that in October this year, the Union Cabinet, chaired by the Prime Minister Narendra Modi, approved to release an additional instalment of Dearness Allowance  to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1.7.2021 representing an increase of 3% over the existing rate of 28% of the Basic Pay / Pension, to compensate for price rise.

This increase was in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.  The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.9,488.70 crore per annum.  This will benefit about 47.14 lakh Central Government employees and 68.62 lakh pensioners.