Cabinet approves 3% hike in Dearness Allowance; now stands at 53%

The combined impact on the exchequer due to the DA and DR increases would be Rs 9,448.35 crore per annum, according to the press statement

With Diwali drawing close, the Union cabinet on Wednesday announced a 3 per cent hike in dearness allowance (DA) for central government employees, and a similar 3 per cent jump in dearness relief (DR) which goes to pensioners.

The increase would benefit roughly 4.9 million central government employees and 6.5 million pensioners.

DA and DR are paid to Central government employees and pensioners to cushion the cost of living against inflation. CPI inflation soared past 5 per cent in September.

With this hike, DA and DR are now 53% for central government employees and pensioner’s basic salary and basic pension with effect from July 1, 2024. This hike takes place twice a year and after January’s raise, it was due in July.

“This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” a press statement issued by the government said.

The combined impact on the exchequer on account of both DA and DR would be Rs 9,448.35 crore per annum, according to the press statement.

The last revision in DA adjustment was announced in March, with effect from January 2024.

The allowance was then hiked by a 4 per cent making central government employees eligible for DA of 50 per cent of their basic salary, and pensioners a DR of 50 per cent of their basic pension.