Cabinet approves 2 per cent hike in DA for central govt employees

New Delhi: Ahead of Diwali, the Centre on Thursday approved 2 per cent dearness allowance and relief benefiting about 50.68 lakh employees and 54.24 lakh pensioners.

The decision to provide 2 per cent DA on basic pay was taken by the Union Cabinet and will be effective from July 1, 2016.

The 2 per cent DA will result in annual burden of Rs 5,622.10 crore, though for period of 8 months (July-February in 2016-17), it would be Rs 3,748.06 crore.

The central government had increased DA by 6 per cent to 125 per cent in March this year. DA was later merged with the basic pay following the implementation of 7th Pay Commission.

"The Union Cabinet has given its approval to release an instalment of DA to Central Government employees and Dearness Relief (DR) to Pensioners from July 1, 2016 representing an increase of 2 per cent of the revised Basic Pay/Pension, to compensate for price rise," a press statement said.

According to statement, the increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 5,622.10 crore per annum and in the Financial Year 2016-17 for the period of 8 months (i.e. from July 2016 to February 2017), it would be Rs 3,748.06 crore.