The Union cabinet has approved the increase in dearness allowance for government employees and pensioners by 3 per cent effective from Jan 1, 2022. This will increase the DA from the previous 31 per cent of basic pay to 34 per cent.
Prime Minister Narendra Modi chaired the Union Cabinet meeting to approve the release of an additional instalment of dearness allowance as per 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 9,544.50 crore per annum. This will benefit about 47.68 lakh Central Government employees and 68.62 lakh pensioners," said the statement by the government.
The cabinet notification said the term “basic pay” means the pay drawn as per the 7th pay commission matrix and does not include any other type of pay like special pay.
Dearness allowance is a component of government employees' and retirees' salaries that helps to offset the effects of inflation.
For the second month in a row, retail inflation has remained above the Reserve Bank of India's target range of 2-6 per cent. This does not include the jump in oil prices caused by the Russia-Ukraine war.
After a long period, the Centre had boosted the dearness allowance and dearness relief for Central government employees to 28 per cent from 17 per cent in July 2021. The DA increased by 3 per cent in October of last year.
