The Cabinet headed by Prime Minister Narendra Modi on Friday approved hiking the dearness allowance for central government employees to 21 per cent of basic pay from the earlier 17 per cent of basic pay with effect from January 1, 2020, Minister for Information and Broadcasting Prakash Javadekar said.
The move is likely to benefit about 48 lakh employees and 65 lakh pensioners, Javadekar said. The hike will also be beneficial for 1.13 crore families, he said.
The increase in dearness allowance will cost the Centre an additional ₹14,595 crore.
PM Modi’s government had implemented the 7th Pay Commission in January 2016. The salaries were then hiked and now with an increase in dearness allowance the move is likely to benefit employees, the minister said.
Dearness Allowance is granted to employees of the central government each year with effect from January 1 and July 1 and is paid in the month of March and September respectively. It is calculated on the basis of a rise in inflation and increase in prices of essential commodities.
“The combined impact on the exchequer on account of both dearness allowance and dearness relief would be an estimated ₹12,510.04 crore per annum and ₹14,595.04 crore in the financial year 2020-21 (for a period of 14 months from January 2020 to February 2021),” an official statement said.
{{/usCountry}}“The combined impact on the exchequer on account of both dearness allowance and dearness relief would be an estimated ₹12,510.04 crore per annum and ₹14,595.04 crore in the financial year 2020-21 (for a period of 14 months from January 2020 to February 2021),” an official statement said.
{{/usCountry}}“The increase is in accordance with the accepted formula, which is based on the recommendations outlined in the 7th Central Pay Commission,” it added.