“This is an increase of 7%over the existing rate of 100% of the basic pay/pension, to compensate for price rise,” said a government release.
The decision will benefit around 8.5 million central government employees and pensioners. The decision is expected to be followed by several states and a similar DA package may benefit millions of state government employees.
“The combined impact on the exchequer of both DA and DR would be approximately of Rs. 7,691 crore per annum and Rs. 5,127 crore respectively for the period between July 2014 to February 2015,” said the release.
This money, in the hands of millions of employees ahead of the festive time, is also expected to act as a mini-stimulus to the economy if the beneficiaries spend it. The UPA government had earlier increased DA to 100 % from January 1, 2014.