With Diwali approaching, the Union Cabinet announced a 3 percent increase in the dearness allowance (DA) for central government employees, along with a similar 3 percent rise in dearness relief (DR) for pensioners. This adjustment will benefit approximately 4.9 million central government employees and 6.5 million pensioners.
DA and DR are provided to help employees and pensioners cope with rising living costs due to inflation, which surpassed 5 percent in September. Following this hike, the DA and DR will be set at 53% of the basic salary and basic pension for both central government employees and pensioners, effective July 1, 2024. These increases are implemented twice a year; this adjustment follows January’s raise, which was due in July.
“This increase is in line with the established formula based on the recommendations of the 7th Central Pay Commission,” stated a government press release.
The overall financial impact of both the DA and DR adjustments on the government will amount to ₹9,448.35 crore annually, as per the statement.
The last revision in DA was made in March, taking effect from January 2024, when it was raised by 4 percent, bringing the DA for central government employees to 50 percent of their basic salary, while pensioners received a DR of 50 percent of their basic pension.
