New Delhi: Less than a month after a personal income tax relief, the Union Cabinet on Tuesday approved a 3 per cent hike in Dearness Allowance or DA for government employees and dearness relief to pensioners that will be effective starting 1 January, 2019. The current rate stands at 9 per cent.
The Centre expects that it will benefit more than one crore central government employees and pensioners. The cost to exchequer is expected to be northwards of Rs 9,000 crore.
Last August, the National Democratic Alliance government had approved an increase of 2 per cent in the Dearness Allowance for the central government employees, effective from July 1, 2018, over the rate of 7 per cent of the basic pay or pension in order to "compensate for price rise". Previously, in March 2018, the Cabinet had increased DA from 5 per cent to 7 per cent in accordance with the recommendations of the 7th Central Pay Commission, a move that benefited about 48.41 lakh central government employees and 61.17 lakh pensioners.
Dearness allowance is a cost of living adjustment allowance paid to government employees and pensioners. It is a component of salary, and is counted as a fixed percentage of the person's basic salary. It is adjusted according to the inflationary trends to lessen the impact of inflation on government employees. India, Pakistan and Bangladesh are the only countries in the world where government employees are given such an allowance.
According to information hosted by government websites, DA is currently based on the All India Consumer Price Index (Industrial Workers).
Earlier, Shiv Gopal Mishra, Chief of National Joint Council of Action (NJCA), had claimed that the Narendra Modi government is serious about offering a hike in the salaries of the Central Government employees.
The Central Government employees have been demanding a hike of up to Rs 8,000 in the minimum pay and an increase in the fitment factor from 2.57 times to 3.68 times beyond the recommendations of the 7th Pay Commission.