Holiday Cheer: A total of 68.62 lakh pensioners and 47.68 lakh central government employees will benefit from the 4% increase in Dearness Allowance.
The proposal to raise the dearness allowance (DA) for central government employees and pensioners from 31% to 38% of the basic pay, an increase of 4%, with effect from July 1, 2022, was approved by the cabinet on Wednesday.
The proposal to release an additional installment of DA to offset the price increase was approved at the Cabinet Committee on Economic Affairs (CCEA) meeting, which was presided over by Prime Minister Narendra Modi.
Since the latest dearness announcement hike’s effective date is July 1, the staff would be paid the arrears along with their latest salaries, in a festive cheer for about 47.68 lakh central government employees and 68.62 lakh pensioners, and is also applicable for civilian employees and those employed in defense services.
The additional financial implications of this Dearness Allowance increase for Central Government employees are estimated to be 6,591.36 crores per year, and 4,394.24 crore in the fiscal year 2022-23 – from July 20, 2022, to February 20, 2024.
Each year on January 1 and July 1, the central government revises the dearness allowance and dearness relief; however, the decision is typically announced in March and September.
Prior to this, the Cabinet had approved the proposal in March to raise the dearness allowance (DA) for central government employees and the dearness relief (DR) for pensioners by 3% to 34% of the basic pay from 31% previously, effective January 1, 2022.
The government was paying employees three months in arrears at the time. Every year, the central government revises the dearness allowance and dearness relief, but the decision is usually announced in March and September.
Any adjustments to the dearness allowance are made in accordance with the accepted formula, which is based on the 7th Central Pay Commission’s recommendations to compensate for price increases.
With retail inflation exceeding the upper end of the Reserve Bank of India’s target range of 2-6 percent per month, the DA was increased by 4% to 38% of basic pay.
All those paid according to the 7th Pay Commission will receive a 720 increase in DA on a basic salary of 18,000, and a 1,000 increase if the basic salary is 25,000.
Holiday Dearness Compensation
Similarly, those on a 50,000 basic salary will now receive a 2,000 monthly benefit, while those on a $100,000 basic salary will receive a 4,000 monthly benefit after the 4% increase in dearness allowance.
From July 1, central government pensioners and family pensioners will be eligible for dearness relief (DR) at the same revised rate as employees. The pension disbursing authorities, including nationalized banks, will calculate the amount of DR payable to each pensioner on an individual basis.
The central government pensioners, civilian central government pensioners/family pensioners, members of the armed forces, civilian pensioners paid out of the defense service, all India service pensioners, railroad pensioners/family pensioners, and pensioners receiving a provisional pension will all be subject to the revised rates.
All employees paid according to the 7th Pay Commission received a dearness allowance at a rate of 17% until December 31, 2019, after which there was no increase or revision required by Covid for an additional 1.5 years.
The dearness allowance was subsequently raised from 11% to 28% in July 2021, then again by 3% in October 2021, all of which took effect on July 1, 2021. Since July 1, 2021, DA on salaries for all central employees and pensions for retirees has been 31%.
The dearness allowance was then also increased by 3% in January 2022, and the subsequent addition of 4% effective July will bring the DA to 38% of basic pay.
“The additional installment of Dearness Allowance and Dearness Relief at 4%, due to Central Government employees and pensioners on July 1, 2022, has been approved by the Cabinet.” tweeted by the PIB.
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