Cabinet hikes dearness allowance for central govt employees by 3%

The Union Cabinet on Wednesday approved the hiking of dearness allowance (DA) and dearness relief (DR) for central government employees by 3 per cent to 34 per cent, an official statement said.

The move will benefit about 4.8 million central government employees and 6.9 million pensioners and will be effective from January 1, 2022.

The statement said this was to compensate for price rise and was “in accordance with the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission.”

The combined impact on the exchequer on account of increase in DA and DR will be Rs 9,544.5 crore per annum. In October last year, the Cabinet had hiked the two allowances by 3 per cent to 31 per cent. It was effective from July 1, 2021. Before that in July, the government had restored DA and DR and increased the rate of allowance from 17 per cent to 28 per cent. Because of the pandemic, the central government had frozen the three additional instalments of DA and DR, which were due on January 1, 2020, July 1, 2020, and January 1, 2021.

MSME programme

The Cabinet also approved a World Bank-assisted Rs 6,062 crore funding programme for small and medium businesses to help improve their access to market and credit. The programme, named ‘Raising and Accelerating MSM Perfor­mance’ (RAMP) for MSMEs will commence in FY23. Of the total outlay under the progra­mme, Rs 3,750 crore ($500 million) will come from World Bank loan, and the remaining Rs 2,312.45 crore will be funded by the Centre. A total of 555,000 MSMEs have been specifically targeted for enhanced performance.