7th Pay Commission News: In a big development for lakhs of Central Government Employees and pensioners, the Modi government has decided to increase the Dearness Allowance (DA) by 5 per cent. The decision means that over 50 lakh government employees will get 17 per cent DA, instead of 12 per cent as earlier.
"The Union Cabinet chaired by Prime Minister Narendra Modi today approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2019 representing an increase of 5% over the existing rate of 12% of the Basic pay/Pension, to compensate for price rise," a statement released after the union cabinet meeting said.
"This increase is in the [Dearness Allowance (DA)] is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission," the statement further said.
Announcing the 5 per cent additional DA, Union Minister Prakash Javadekar on Wednesday called government's decision to increase the DA as "Diwali Cheer". Hike in Dearness Allowance definitely comes as huge news for employees and pensioners. The new DA will be applicable from July 1. Employees are expected to get the arrear under the hiked DA.
How much will the increase in DA cost to the government
The combined impact on the government's exchequer on account of both Dearness Allowance and Dearness Relief would be Rs. 15909.35 crore per annum and Rs. 10606.20 crore in the financial year 2019-20 (for a period of 08 months from July, 2019 to February, 2020).
This will benefit about 49.93 lakh Central Government employees and 65.26 lakh pensioners.
The additional financial implication on account of this increase in Dearness Allowance is estimated at Rs 8590.20 Crore per year; and Rs 5726.80 Crore in the current Financial Year of 2019-20 (for 8 months from July 2019 to February 2020).
The additional financial implication on account of the Dearness Relief to pensioners is estimated to be Rs 7319.15 Crore per annum and Rs 4870 Crore in the current FY.
Video: Prakash Javadekar announces the Centre's decision to hike DA by 5 per cent
"DA for government employees increased by 5 %. Around 50 lakh central government employees and 62 lakh pensioners to be benefited" Union Minister Prakash Javadekar said. Watch:
Dear Allowance/Dearness Relief is paid to Central Government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value. Dear Allowance/Dearness Relief is revised twice a year from 1st January and 1st July.
Who all will benefit from the DA hike of government employees and pensioners?
There are 1.1 crore employees and pensioners in the central government. After the 5 per cent hike in DA, the salary of these employees under the 7th Pay Commission pay scale will increase from Rs 900 to as much as Rs 12500 per month.
Over 50 lakh central government employees and more than 62 lakh pensioners across the country in various positions will be benefitted after the decision.
How is DA calculated
Percentage of DA = {(Average of All-India Consumer Price Index for the past 12 months (Base year 2001=100) -115.76)/115.76}x 100.
The calculation of DA is in fact done according to the AICPI data. This is done in the following manner.
June 2019: AICPI-316
Total 12 months: 3673 (301 + 301 + 301 + 302 + 302 + 301 + 307 + 307 + 309 + 312 + 314 + 316) / 12) - (261.4) x100 / 261.4)
Increase in DA: 17% -12% = 5%
Also Read: 7th Pay Commission: Government employees may face salary cut
Also Read: Govt makes BIG announcement, relaxes rules to benefit all central government pensioners
(The copy has been updated to reflect the official statement of union cabinet announcing the government's decision on DA hike)
Latest Business News
