This increase is aimed at compensating for the price rise.
The Central Government has decided to increase the dearness allowance (DA) of its employees and dearness relief (DR) to pensioners by one per cent. This increase will raise the DA from four per cent of the basic pay/pension to five per cent.
The increased allowance will be applicable from July 1, 2017.
The move was made with the objective of compensating for the price rise. The increase is in accordance with the recommendations of the 7th Pay Commission and its accepted formula.
The raise will benefit around 49.26 lakh Central Government employees and around 61.17 lakh pensioners. However, both DA and DR will impact the accounts of the exchequer by Rs 3068 crore per annum and Rs 2045 crore in the financial year 2017–18, for a period of eight months from July 2017 to February, 2018.
The Central Government has also decided to introduce the Payment of Gratuity (Amendment) Bill 2017 in the Parliament. The amendment will increase the maximum limit of gratuity of employees in the private and public sectors/autonomous organisations under the Government, which are not covered under CCS (Pension) Rules, at par with Central Government employees.