New Delhi, October 9: The Union Cabinet on October 9 announced to increase the dearness allowance/dearness relief by 5 per cent from the existing rate of 12 per cent, which will benefit over 50 lakh central government employees and 65 lakh pensioners.
Dearness allowance, or dearness relief, is revised twice a year between January 1 and July 1. It is a pay or pension paid to central government employees or pensioners to assist them to adjust their cost of living, while protecting their earning from erosion in the real value.
The increase, which follows the formula based on the recommendations of the 7th Central Pay Commission, has been made effective from 1 July, 2019.
“This is the highest ever 5 percentage points increase in DA in one go by the central government,” Information and Broadcasting Minister, Prakash Javadekar, said during the announcement.
According to the Union Cabinet, this increase in DA is estimated at Rs 8,590.20 crore per year; and Rs 5,726.80 crore in the current financial year of 2019-20. While the additional financial implication on account of the DR is estimated to be Rs 7,319.15 crore per annum and Rs 4,870 crore in the current FY.
The decision will cost the exchequer Rs 15,909.35 crore per annum and Rs 10,606.20 crore in the financial year 2019-20 — for eight months, from July 2019 to February, 2020. This will benefit about 49.93 lakh central government employees and 65.26 lakh pensioners, the cabinet said.