The Ministry of Finance has announced the most awaited hike in the dearness allowance (DA) and dearness relief (DR) for Central government employees. On 28 September, the Government has announced the decision to increase DA and DR by four per cent.
The increment in DA and DR will come into effect from July 2022.
This hike will take the DA and DR from 34 per cent to 38 per cent of the basic salary of the employees. It is estimated that this increment will result in an additional spend of Rs 6,591.36 crore per annum, and Rs 4,394.24 crore in the financial year 2022-23.
The combined impact on the exchequer following this announcement will be about Rs 12,852.56 crore per year, and Rs.8,568.36 crore in the financial year 2022-23.
Over 47 lakh Central government employees will benefit from this increment in DA and DR. About 69 lakh pensioners will also benefit from this move. Last time, the Government had hiked the DA and DR in January 2022 by three per cent, from 31 to 34 per cent.
These hikes come into effect twice a year in January and July and are announced in March and September every year.
Dearness Allowance is linked to inflation and increase in the price of essential commodities. The rate of inflation considered for DA calculation is based on the All India Consumer Price Index for industrial workers.