The government on Thursday announced a 7% hike in the dearness allowance (DA) of its employees to give them relief from the near double-digit inflation ahead of the festival season. Besides the five million central government employees, about four million pensioners will also stand to benefit from the decision taken by the cabinet on Thursday.
Although the DA will increase from 51% to 58% of basic salary from July 1, employees, especially those who are in the junior scales, do not seem to be happy with the quantum.
“The inflation index, the basis of calculating the dearness allowance, is not actually reflecting the cost of living and erosion in employees’ remuneration due to price rise,” said KKN Kutty, secretary general of the Confederation of Central Government Employees and Workers.
The general inflation for August was at a near-one-year high of 9.78%.
The DA and dearness relief hike will cost the exchequer Rs 7,229 crore a year, while for the remaining period of the current fiscal the implication will be Rs 4,819 crore, information and broadcasting minister Ambika Soni told reporters on Thursday.