In a bid to provide relief from high inflation, the govt on Tuesday increased dearness allowance (DA) by 6 percent to 51 percent, benefiting over 50 lakh central govt employees and 38 lakh pensioners.
“The decision to hike DA was taken by the Union Cabinet at its meeting here,” a Union minister said in New Delhi on Tuesday.
The combined impact of the hike will be Rs 5,715.90 crore per annum. However in the next financial year, the burden on the exchequer would be Rs 6,668.52 crore after the additional 6 percent DA payout is factored in from 1st January to 31st March this year.The increased DA, which will be effective from 1st January, is provided to government staff and pensioners to compensate them for rising prices.
Presently, the DA is paid at 45 percent of basic pay. The increase in DA by 6 percent would be in accordance with the formula prescribed by the Sixth Pay Commission for central government employees.
The decision will provide direct relief to around 50 lakh employees and 38 lakh pensioners.
The DA is revised twice a year, on 1st January and 1st July. The relief came amid high retail prices, as inflation has been ruling above 9 percent.
The Consumer Price Index (Industrial Workers), which is the basis for revising dearness allowance, was 9.47 percent in December and 9.30 percent in January.
Headline inflation, based on movement in wholesale prices, was 8.31 percent in February, much above the comfort level of 5-6 percent. Food inflation, too, was hovering above 9 percent.