Cabinet approves 4% hike in dearness allowance to central government employees

Tags: Economy/Finance National News

The cabinet has announced a 4% increase in dearness allowance for central government employees and pensioners.

An Overview of the News

• With a four per cent increase in DA, the total DA becomes 42 per cent of the basic pay.

• The increase in dearness allowance will benefit over 47 lakh central government employees and over 69 lakh pensioners.

• The Union Cabinet has approved the release of additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from January 1, 2023.

• The combined impact on the exchequer on account of both dearness allowance and dearness relief would be more than Rs 12 thousand 815 crore per annum.

• The increase in Dearness Allowance is as per the approved formula, which is based on the recommendations of the 7th Central Pay Commission.

About Dearness Allowance (DA)

• Dearness Allowance (DA) is compensation given to employees to offset the effects of inflation and is calculated as a percentage of an employee's basic salary.

• The rate of inflation varies depending on the location, job profile and policies of the organisation.

• Dearness Allowance is revised from time to time to keep it relevant and effective.

• It aims to provide relief to the employees who are struggling to face the rising cost of living, maintain their standard of living and meet the day to day expenses.

• DA is paid in addition to basic pay and is subject to income tax.