The Union Cabinet on Wednesday hiked dearness allowance (DA) and dearness relief (DR) for the central government employees by 4 percentage points to 42 per cent of basic pay.
The move will benefit about 4.8 million central government employees and 6.9 million pensioners. The decision will be effective from 1 January, 2023.
Briefing reporters, information and broadcasting minister Anurag Singh Thakur said the hike is based on the percentage increase of All India Consumer Price Index for industrial workers as well as the recommendations of the 7th Pay Commission.
“Every financial year, the financial burden will be Rs 12815 crore because of the DA/DR hike. Since it is being implemented from 1 January, 2023, there will be a financial burden for 14 months in FY24 amounting Rs 14,951.52 crore," Thakur said.
Thakur said for DA, the government will spend Rs 6554.40 per annum and Rs 7646.8 crore in FY24 for the 14 months. Similarly, for DR, the government will spend Rs 6261.2 per annum and Rs 7304.72 crore in FY24.
In September last year, the government had increased DA/DR by 4 percentage points to 38 per cent of basic salary.
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Government increases DA/DR to compensate for price rise based on the recommendations of the Central Pay Commission. Except for the pandemic, when the central government had frozen the three additional installments of DA and DR, which were due on January 1, 2020, July 1, 2020, and January 1, 2021, the government has been increasing DA/DR twice a year.
