Union cabinet approves 3% DA hike for 11.6 million central employees and pensioners, effective July 1

New Delhi: The Union cabinet on Wednesday approved a 3% increase in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, offering an inflation-linked benefit to more than 11.6 million people ahead of the festive season.

The increase will take effect retrospectively from July 1 and will cost the exchequer ₹10,016 crore, information and broadcasting minister Ashwini Vaishnaw said in a briefing after the cabinet meeting.

The revision follows the formula based on the recommendations of the Seventh Central Pay Commission. The government revises DA and DR twice a year, usually in January and July, to help central government employees and pensioners cope with inflation. With the latest revision, overall DA rate went up to 63% from the existing 60%.

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The revision is intended to cushion about 4.8 million central government employees and 6.8 million pensioners against rising prices.

The government also revised DA rates for employees covered under the Fifth and Sixth Pay Commission scales. For employees under the Sixth Pay Commission, DA has been increased to 269% from 262% of basic pay, a rise of seven percentage points.

For employees under the Fifth Pay Commission, the rate has been raised to 497% from 483% of basic pay, an increase of 14 percentage points. These revisions will also take effect from July 1.

Separately, the Department of Public Enterprises (DPE) revised the dearness allowance for executives and non-unionised supervisors of central public sector enterprises (CPSEs).

The department has fixed industrial dearness allowance for CPSE executives and non-unionised supervisors at 59.1% on 2017 pay scales, effective from October 1, up 3.4 percentage points from 55.7%, according to an office memorandum.

The revision covers employees in these categories in accordance with the applicable pay structures and rules governing CPSE compensation.