Government Approves 3% Dearness Allowance Hike

The government has approved a proposal to hike the dearness allowance for its employees during the festival season.

The union cabinet approved an increase of 3% on the dearness allowance of the central government employees and the dearness relief of pensioners, taking it to 31%, from the existing rate of 28% of the basic pay or pension, Union minister Anurag Thakur said in a press briefing on Thursday. The hike is estimated to cost the exchequer an additional Rs 9,488.7 crore a year, Thakur said.

The dearness allowance is paid to government employees and pensioners to adjust for the rise in the cost of living.

The cabinet also approved release of an additional instalment of the dearness allowance, due from July 1, 2021.

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, according to a press release by the government. The move is expected to benefit about Rs 47.14 lakh central government employees and 68.62 lakh pensioners.

The announcement comes at a time when the economic economy continues to show signs of recovery, buoyed by festive consumption.

India had rolled back a hike in special allowances to central government employees and pensioners when the pandemic struck to curb spending. In September this year, the government withdrew the caps to regulate expenditure by ministries for the rest of the fiscal as revenue recovered.