Govt approves 7% hike in dearness allowance

Dearness allowance to be 107% of basic pay from 1 July 2014

Government has given nod to 7% hike in dearness allowance (DA) raising it to 107% of basic pay. The hike will be effective from 01 July 2014. This move would benefit 30 lakh central government employees and about 50 lakh pensioners and dependents.

The Union Cabinet chaired by the Prime Minister today gave its approval for the release of an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners with effect from 01 July 2014. This is an increase of 7% over the existing rate of 100% of the Basic Pay/Pension, to compensate for price rise.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission. The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of the order of approximately Rs 7691 crore per annum and Rs 5127 crore respectively in the financial year 2014-2015 (i.e. for a period of eight months from July 2014 to February 2015).

The DA is worked out on the basis of 12-month average Consumer Price Index for Industrial Workers, which stood at stood at 7.25% for July 2013 to June 2014 period. Thus, the hike in DA was decided at 7%.

Earlier, the government had raised DA from 90% to 100% effective from 01 January 2014.

Powered by Capital Market - Live News