Union Cabinet Approves 3 Percent DA Hike For Central Government Employees

New Delhi: The Union cabinet headed by Prime Minister Narendra Modi on March 30 approved a hike of 3 percent in the Dearness Allowance (DA) for employees of the central government and Dearness Relief (DR) for pensioners. 

The cabinet committee on economic affairs took the decision in a meeting which was chaired by PM Modi. The hike will come into effect from January 1, 2022.

The government statement said that it would mean an increment of 3 percent over the current rate of 31 percent of the basic pay so as to compensate for the price rise.

The central government added that this increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

As per the government, the latest hike in DA will benefit 47.68 lakh central government employees and 68.62 lakh pensioners and it comes as a major relief for those who are bearing the brunt of rising fuel prices.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would amount to Rs. 9,544.50 crore per annum.

Meanwhile, Dearness Allowance is actually a component of the monthly salary of central government employees and it is paid to the employees to compensate for the increase in the cost of living as a result of inflation.

For government employees, the government decides the percentage and changes as per its wish. The DA and the DR is revised by the government twice every year - in January and July. However, it differs from person and person and it is based on whey they are - urban sector, semi-urban sector or the rural sector.

Earlier, the centre had hiked the DA and DR for the central government employees and pensioners to 28 percent from 17 percent in July 2021 after not changing them for more than one and half years owing to the Covid-19 pandemic.

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