Dearness Allowance for government employees hiked from July 1
What's the story
The Union Cabinet on Wednesday approved a hike in the Dearness Allowance (DA) and Dearness Relief (DR) for employees of the central government and pensioners. Union Minister Anurag Thakur announced that the Cabinet Committee on Economic Affairs (CCEA) has hiked DA and DR from 17% to 28%. The Centre had put on hold the allowance for its employees last year amid the COVID-19 pandemic.
Details
DA to cost government Rs. 34,400 crore: Thakur
Thakur said at a Cabinet briefing, "The Dearness Allowance for central government employees and pensioners has been increased from 17% to 28%. This will be applicable from July 1, 2021." The decision will benefit around 50 lakh employees and will cost the government Rs. 34,400 crore, Thakur said. The Centre is reportedly likely to restore the 7th Pay Commission DA/DR benefits by September.
Allowance
What is Dearness Allowance?
The DA is revised twice annually—in January and July. The allowance is aimed at helping employees and pensioners deal with rising inflation. It is divided into industrial dearness allowance (IDA) and variable dearness allowance (VDA). The IDA is revised quarterly and depends on the Consumer Price Index. It is applicable for the public sector employees, while the VDA is applicable for central government employees.
Inflation
Inflation remained over 6% for second month in June
Last month, the retail inflation in India had dipped to 6.16%. The CPI inflation remained over the 6% threshold set by the Reserve Bank of India (RBI) for the second straight month. Meanwhile, the wholesale price index or WPI-based inflation remained in double digits for the third straight month, easing only marginally to 12.07% in June.
History
DA increment was stalled due to COVID-19 last year
Earlier, central government employees used to get DA of 17% on their basic salary. A 4% hike on the same had been approved last year, effective January 1. However, as the COVID-19 pandemic hit and worsened India's ongoing economic slowdown, the increment was stalled in April 2020. The DA and DR installments for January and July 2020 and January and July 2021 remain due.