The Finance Ministry has recently issued an order to implement the Union Cabinet decision to hike Dearness Allowance (DA) for central government employees from July 1. After over one-and-half-year, the Union government has increased the Dearness Allowance and Dearness Relief (DR) of central government employees and pensioners. The move comes at a time when retail inflation has remained over 6 per cent for the two straight months. The surge in allowance will help millions of beneficiaries to cope up with rising food and oil prices amid coronavirus pandemic.
“These orders shall also apply to the civilian employees paid from the Defence Services Estimates," finance ministry said, adding for Armed Forces personnel and Railway employees separate orders will be issued by the respective ministries. This move is expected to benefit more than 48 lakh central government employees, and 65 lakh pensioners.
Let’s take a look at the recent changes that central government employees must know
1) To provide some relief amid coronavirus pandemic, the Union government has surged the dearness allowance to 28 per cent from 17 per cent. The central government employees have been receiving 17 per cent DA since July, 2019. The Central stalled DA last year in the wake of coronavirus pandemic.
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2) The revised DA will be come into effect from July, 2021. A central government employee who gets Rs 18,000 per month, will see a hike of 11 per cent in his take-home salary. His salary will jump by Rs 5,040 from July. The Dearness Allowance from January 1, 2020 to June 30, 2021 will remain 17 per cent for government employees. There will be no DA arrears for the mentioned period.
3)"The DA payable to central government employees shall be enhanced from the existing rate of 17 per cent to 28 per cent of basic pay. The increase subsumes the additional instalments arising on January 1, 2020; July 1, 2020, and January 1, 2021," said the department of expenditure under the finance ministry.
4) As the dearness allowance is linked to the basic salary, a hike in DA will also raise the monthly provident fund (PF) and gratuity amount of the central government employees. So, PF, Travel Allowance and gratuity will go up for the employees and the pensioners.
5) Commenting on Centre’s decision to raise dearness allowance of the central government employees, Sajai Singh, Partner, J Sagar Associates, said, “This is a welcome move since coronavirus has really shaken the economic foundation of the country and DA is paid to offset inflation. Inflation affects the price of everything and it’s impact may vary marginally from location to location, so hopefully this jump will bring relief to the beneficiaries."