The Indian government has approved the hike in dearness allowance for central- government employees from existing 17 per cent to 21 per cent. The move is estimated to benefit around four lakh central-government employees and 65 lakh pensioners.
The union cabinet headed by the prime minister cleared the proposal on Friday, which shall come into effect from January 1, 2020 onwards.
Salaries were hiked when the incumbent government implemented the 7th Pay Commission in January 2016 and now with the hike in DA, employees will benefit further.
Dearness allowance is granted to employees of the central government twice each year with effect from January 1 and July 1, and paid to employees in the coming March and September respectively.
The hike is going to cost the Government around 14,595 crores and is likely to benefit more than 1 crore families.
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.
On October 9, last year, the Government announced a five per cent hike in DA, raising it from 12 per cent to 17 per cent. It was claimed to benefit 50 lakh government employees along with 65 lakh pensioners. Union minister Javedkar claimed it was a gift for employees before Diwali.
The last and current hike in dearness allowances have been one of the highest increases since 2016. In 2018, the DA hike announced by the government was a 2 per cent increase only.