The Cabinet on Thursday approved the 2 per cent hike in Dearness Allowance (DA) for Central Government employees and pensioners, effective from July 1, 2016. The proposal to hike the DA was granted during the Cabinet meeting today afternoon at the Prime Minister’s Office. The announcement, which comes ahead of Diwali, is set to bring cheer to around 50 lakh central government employees and 58 lakh pensioners in the country.
As per the agreed formula, government increases DA on the basis of 12-month average of the retail inflation and does not consider the price rise rate beyond decimal point for deciding the rate of dearness allowance. According to statement, the increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 5,622.10 crore per annum and in the Financial Year 2016-17 for the period of 8 months (i.e. from July 2016 to February 2017), it would be Rs 3,748.06 crore.