Cabinet approves 6% DA hike for central government employees

Nearly 50 lakh central government employees and 38 lakh pensioners can look forward to a 6% increase in their dearness allowance with the Union Cabinet approved the proposal on Tuesday.

If the move is approved, the dearness allowance, which is linked to the consumer price index, will rise from 45% currently to 51%, triggering a further change in the allowance structure. For instance, payments like conveyance allowance and children's education allowance will also increase by 25%.

Further, special compensatory allowance for those posted in remote areas such as the north-east and Jammu & Kashmir as central government employees in these areas are entitled to a Special Compensatory Allowance. Their special allowance goes up by 25% the moment the 50% trigger is breached.

While the move will provide some relief to government employees and pensioners whose salaries and pension are usually revised once a decade, the increase will cost the exchequer Rs 1,500 crore annually. Households have been combating high inflation, which in recent weeks was led by rising fruit and vegetable prices. Wholesale price index-based inflation is expected to be around 8% at the end of March.

Sources said the additional installment of DA will be released with effect from January this year. Typically, the increase takes place in two installments effective January 1 and July 1.

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