The finance ministry issued an order on Tuesday to carry out the recent Cabinet decision to increase the dearness allowance for government employees from 17% to 28% starting July 1.
Last week, the Union Cabinet approved an 11-percentage-point increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners, effective July 1. The increase will benefit approximately 48 lakh central government employees and 65 lakh pensioners.
What is Dearness Allowance?
In India, the Dearness Allowance is a computation based on inflation and allowance granted to government employees, public sector employees, and pensioners. To reduce the impact of inflation on people, Dearness Allowance is computed as a percentage of an Indian citizen's basic income.
What is Dearness Relief?
The pensioner's basic pension/family pension is used to calculate Dearness Relief. The Pension Disbursing Agencies adjust and pay the Dearness Relief on the pension.
"These orders shall also apply to the civilian employees paid from the Defence Services Estimates," it said, separate orders will be issued by the corresponding ministries for Armed Forces personnel and Railway employees, according to the statement.
The increased DA rate, up from 17%, will be 28%. According to a document from the Finance Ministry's Department of Expenditure, the DA payable to central government employees will be increased from 17 percent to 28 percent of basic income.
Due to the COVID-19 epidemic, the Finance Ministry postponed an increase in dearness allowance (DA) until June 30, 2021 in April of last year. From January 1, 2020, to June 30, 2021, the rate of DA was 17%.
Now that the DA accounts for 28% of basic pay, central government employees are anticipating an increase in the HRA, which varies from city to city depending on whether central government employees' residences fall into the X, Y, or Z categories.