In a move which will bring cheer to 50 lakh central government employees and 58 lakh pensioners ahead of Diwali, the Cabinet has approved a two percent hike in dearness allowance (DA).
Finance Minister Arun Jaitley, after a meeting on Thursday, announced that the Cabinet has cleared the release of instalment of DA to Central Government employees and dearness relief to pensioners with effect from July 2016, reported ANI. The two percent DA will result in an annual burden of Rs 5,622.10 crore.
The central government employee unions wanted that the DA be increased by 3 percent.
President of the Confederation of Central Government Employees KKN Kutty told PTI:
The 12-month average of the Consumer Price Index for Industrial Workers from 1 July 2015 to 30 June 2016 works out to be 2.92 percent. Therefore the unions had pressed for 3 percent hike in DA. We are not satisfied with this.
Dearness allowance and dearness relief is provided to employees and pensioners to neutralise the impact of price rise on their earnings.
Earlier this year, the government hiked dearness allowance by 6 percent to 125 percent of basic pay. The DA was later merged into the basic pay following implementation of 7th Pay Commission award.
As per the agreed formula, the government increases DA on the basis of a 12-month average of the retail inflation and does not consider the price rise rate beyond decimal point for deciding the rate of dearness allowance.
(With inputs from ANI and PTI)
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