The Union Cabinet, chaired by Prime Minister Narendra Modi, Wednesday approved an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners.
Coming into effect from July 1, 2024, it represents an increase of 3 per cent over the existing rate of 50 per cent of the Basic Pay/Pension, to compensate against price rise.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, the Finance Ministry said in a statement.
The combined impact on the exchequer on account of both DA and DR would be Rs 9,448.35 crore per annum.
This will benefit about 49.18 lakh central government employees and 64.89 lakh pensioners.
Notably, the Union government revises DA twice a year, in January and July. DA/DR hike is implemented retrospectively from the cut-off date, i.e., July 1, 2024.
Dearness allowance is a component of the salary of government employees and pensioners. So when DA rises, the take-home salary of central government employees will also go up.