Cabinet approves 6% hike in dearness allowance; to benefit over 1 crore people

NEW DELHI: The Centre today increased dearness allowance for its employees to 119 per cent from 113 per cent, a move that will benefit 50 lakh employees and 56 lakh pensioners.

"Every six months government reviews dearness allowance. This time we have decided to increase DA by six per cent over exiting 113 per cent rate," Finance Minister Arun Jaitley told reporters after Union Cabinet meeting here.

An official statement said the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved release of an additional instalment of Dearness Allowance to central government employees and Dearness Relief to Pensioners from July 1, 2015.

This represents an increase of 6 per cent over the existing rate of 113 per cent of the Basic Pay/Pension, to compensate for price rise, it said.

The decision will benefit about 50 lakh government employees and 56 lakh pensioners, it added

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission (CPC), it said.

The combined impact on the exchequer on account of both DA and DR will be Rs 6,655.14 crore per annum, and Rs 4,436.76 crore in the financial year 2015-16 (a period of 8 months from July, 2015 to February, 2016), it said.

As per the practice, the DA rate increase is an average of 12-month consumer price index-industrial workers from July 1, 2014 to June 30, 2015.

In April, the government had hiked DA by 6 per cent to 113 per cent of their basic pay with effect from January. DA is paid as proportion of the basic pay.