Government Announces 4% Hike in Dearness Allowance for Central Employees

In a significant move aimed at providing relief to government employees and pensioners amidst rising inflation, the Union Government has announced a 4% hike in Dearness Allowance (DA) for central employees, bringing the total to 50%. This decision, approved by the Union Cabinet on Thursday, is set to benefit approximately 50 lakh employees and 68 lakh pensioners across the country.

The announcement was made by Union Minister Piyush Goyal, who highlighted that the hike, effective from January 1, 2024, would elevate the DA from the existing rate of 46% to 50% of the basic pay. This increment comes after the last DA hike of 4% in October 2023, which raised the DA to 46%.

Dearness Allowance serves as a crucial component of employees’ salaries, designed to counteract the impact of inflation and enhance overall remuneration. The combined impact of the DA hike, along with Dearness Relief (DR) for pensioners, would impose an additional burden of Rs 12,869 crore per annum on the exchequer. For the fiscal year 2024-25 (January 2024 to February 2025), this impact is estimated to rise to Rs 15,014 crore.

Alongside the DA increase, several other allowances have also been revised upwards. Transport allowance, canteen allowance, and deputation allowance, among others, have been raised by 25%. Furthermore, House Rent Allowance (HRA) has been enhanced from 27%, 19%, and 9% of the basic pay to 30%, 20%, and 10%, respectively.

Moreover, benefits under gratuity have seen a 25% increment, with the ceiling raised from Rs 20 lakh to Rs 25 lakh. The total burden on the exchequer due to these additional allowances is projected to be Rs 9,400 crore annually.

The hike in DA and DR, following the accepted formula, is in line with the recommendations of the 7th Central Pay Commission. The calculation of DA is based on the Consumer Price Index for Industrial Workers (CPI-IW) data, which is published monthly by the Labour Bureau under the Ministry of Labour. The specific formula for DA calculation, applicable to central government employees and pensioners, ensures a systematic approach in adjusting allowances in response to changes in the cost of living.

This decision by the Union Government underscores its commitment to the welfare of central employees and pensioners, ensuring that their remuneration remains aligned with the prevailing economic conditions. The timely revision of allowances reflects the government’s responsiveness to address the financial needs of its workforce and retirees, thereby fostering greater financial security and stability for millions across the nation.

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