Under the 7th Pay Commission, the Centre declared a 3% hike in the Dearness Allowance (DA) for government employees and pensioners in a union cabinet meeting on economic affairs chaired by Prime Minister Narendra Modi on Wednesday. The change is said to be effective from January 1, 2022.
The Union Cabinet has approved the disbursement of an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01. 2022, representing a 3% increase, to compensate for price increases, according to a statement released by the Centre.
Nearly 47.68 lakh government employees and 68.62 lakh retirees are relieved by the increase in oil and fuel prices, as well as inflation. The plan of increasing the DA had been in the pipeline for over one and a half years but was stalled due to the COVID-19 pandemic.
The DA is an element of the salary for government employees and retirees aimed at soothing the effects of inflation. The effective compensation of government personnel is updated regularly to keep up with rising inflation rates. The Centre revises DA twice a year, between January and July, to combat inflation. It is important to remember that DA differs from employee to employee depending on whether they work in the urban, semi-urban, or rural sectors.
The total impact of Dearness Allowance and Dearness Relief (given to pensioners) on the exchequer would amount to Rs 9,544.50 crore per year.
As of now, the DA stands at 34% from 31% due to the pull-up. Previously, the central government had raised the DA in July 2021, to 28% from 17% and then again in October 2021 to 31%.
The increase will also apply to civilian employees paid by the Defence Services, while additional directives will be issued by the Defence and Railways Ministries, respectively, for Armed Forces employees and Railway personnel.