In a major relief for lakhs of central government employees, the Union Cabinet headed by Prime Minister Narendra Modi today (July 14) approved the hike in Dearness Allowance (DA) given to these employees from 17% to 28% according to sources. The decision to restore DA hike was taken after it was frozen last year. An announcement in this regard will be made in the Cabinet briefing.
Worth mentioning here is that the Centre had frozen DA and DR of central government employees and pensioners last year keeping in view the fall in government's revenue collection and rising spend on social welfare schemes after the outbreak of the Covid-19 pandemic.
As of now three instalments of DA were pending- 4% from January 1, 2020 to June 30 2020, 3% from July 1, 2020 to December 31, 2020, 4% from January 1, 2021 to June 30, 2021.
With the restoration of DA, central government employees are likely to see a big jump in their take-home salary, provident fund contribution and gratuity as well.
Nonetheless, it is still not announced when DA arrears pending since January 2020 will be paid out. The arrear pay-out shall mean a huge outflow to the exchequer. This is because the minimum arrear that a Level-1 employee shall get is Rs. Rs 23,760(4% of Rs 18,000 for 6 months plus 7% of Rs 18,000 for 6 months plus 11% of Rs 18,000 for 6 months).