The Union Cabinet has cleared of a three percent increase in the Dearness Allowance (DA) of central government employees with effect from July 1, 2021, reports said on Thursday.
According to the latest order, the central government employees will now get DA at the rate of 31 percent.
Over 47 lakh central government employees will benefit from the move. The cost to be borne by the government due to the fresh DA and DR hikes would be around Rs 9,488.70 crore per annum.
The government had earlier hiked the DA rate to 28 percent, an 11 percent raise, for central government employees and pensioners in July this year under the seventh pay commission.
The bigger hike last time was because three hikes were kept frozen due to the COVID-19 pandemic. The central government had earlier increased the dearness allowance by 4 percent in January 2020, 3 percent in June 2020, and 4 percent in January 2021.
The increase in DA will result in a proportionate increase in the monthly Provident Fund (PF) and gratuity component of the employees. Both PF (monthly) and gratuity are deducted as per an employee's basic salary plus DA.
The DA rate is announced twice a year (January to June and July to December) to adjust against any rise in inflation.
(Edited by : Kanishka Sarkar)
First Published: IST