7th Pay Commission Latest update: Modi govt's big announcement on 4% hike in DA, DR, arrear clearance likely before Holi

The central government employees, who have been eagerly waiting for the announcement on dearness allowance (DA) hike under the recommendation of 7th Pay Commission by the government, may hear some good before Holi.

The buzz around increase in dearness allowance by up to 4 percent has gained more steam after the announcement of All India Consumer Price Index and after the presentation of the Union Budget 2021. It has been widely reported in the media that the Modi government may increase dearness allowance by up to 4 percent, leading to a substantial hike in the salary of the central government employees. In further cheer to 50 lakh central government employees and 61 lakh pensioners, the government will also make announcements regarding hike in Dearness Relief (DR).

The government's announcement on DA hike will be based on the recommendation of the 7th Pay Commission. At present, central employees get DA of 17 percent, and hence a further increase of DA by 4 percent, will take the total DA to 21 percent. In the aftermath of the COVID-19 crisis, all eyes are fixed on the government's announcement. The DA hike will kick in from January to June 2021 period.

The finance ministry had in April 2020 decided to put on hold increment in dearness allowance (DA) for 50 lakh central government employees and 61 lakh pensioners till July 2021 due to the COVID-19 crisis. In view of the crisis arising out of COVID-19, the government had decided that additional instalment of dearness allowance payable to central government employees and dearness relief (DR) to central government pensioners due from January 1, 2020, shall not be paid. The additional instalment of DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid, the Department of Expenditure said in an office memorandum. However, DA and DR at current rates will continue to be paid.

The last DA hike for central government employees was effected last month effective January 1. 2020. The Union Cabinet had approved a 4 per cent increase in DA for government employees and pensioners to 21 per cent. But with the April decision, this 4 per cent hike was been put on hold. It was reported by news agency PTI that the combined savings on account of freezing of these instalments of DA and DR to central government employees and pensioners would be Rs 37,530 crore in the 2021-22 and the financial year before that. Generally, the states follow the Centre order on DA and DR. It is estimated that the savings on suspension of these instalments of DA and DR of state government employees and pensioners will be Rs 82,566 crore, PTI quoting sources had said.