Cabinet likely to consider DA hike

NEW DELHI: Ahead of the festival season, the Union Cabinet on Thursday is likely to consider a proposal for a 10% hike in the Dearness Allowance (DA) for central government employees and pensioners considering the high rate of inflation in the past six months.

The proposal aims to extend relief to around 50 lakh employees and 38 lakh pensioners from the soaring prices as till recently the inflation rate was over 10% for many months.

Official sources said that the 10% increase, if approved, would be released with effect from July 1 this year. The central staff already get 35% of their basic pay as DA.

According to an official, the proposed increase is in accordance with the formula devised by the Sixth Pay Commission to compensate for price rise. Sources said the proposed 10% hike in DA and Dearness Relief making it 45% is expected to put an extra burden of around Rs 10,000 crore on the exchequer.

The proposed hike will further push up the wage bill of the central government, which has more than doubled from Rs 24,000 crore in 2007-08 to over Rs 55,000 crore in 2010-11 after the implementation of the Sixth Pay Commission recommendations.

In March, the government had increased the DA by 8% from the existing 27%. Its impact on the exchequer was Rs 8,131.20 crore in 2010-11. The DA revision is based on the Consumer Price Index (CPI) for industrial workers, which has been showing a steep increase with other price indices.

PROPOSAL

Extend relief to 50 lakh employees and 38 lakh pensioners 10% hike in DA and Dearness.
Relief making it 45% of basic pay.
Extra burden on exchequer expected to be Rs 10,000 cr.
Will push up central government’s wage bill to over Rs 55,000 cr.