Just before Diwali, a Cabinet meeting chaired by Prime Minister Narendra Modi presented a significant gift to central government employees and pensioners. A massive 3% increase in Dearness Allowance (DA) has been approved, effective July 1. Following this historic decision, the dearness allowance has increased from 55% to 58%.
This significant decision will directly benefit over 4.9 million central government employees and approximately 6.9 million pensioners. This significant increase will impose an additional burden of approximately ₹100 crore per year on the Treasury. This is the second time this fiscal year that DA has been increased for central government employees. The previous increase was a 2% increase in March.
What is Dearness Allowance (DA) and why is it increased
Dearness Allowance (DA) is provided to employees and pensioners to protect them from the effects of inflation and maintain their standard of living. Essentially, it helps maintain the purchasing power of their real income in proportion to inflation. Its rates are based on the All India Consumer Price Index (AICPI) and are reviewed every six months. This year, the 3% increase was necessary based on the AICPI data.
How much will your salary and arrears increase
This 3% dearness allowance increase applies to your basic salary, not your monthly salary.
For example, if your basic salary under the Seventh Pay Commission is ₹18,000, your DA will increase by ₹540 per month (3% of ₹18,000 = ₹540). After this increase, your total salary will become ₹28,440.
Consider another example
If your total salary is ₹60,000 and your basic salary is ₹33,000, the total increase, including three months’ arrears, will be quite substantial. By receiving three months’ arrears, employees will receive a large lump sum before Diwali.
This increase may not seem significant, but in these times of inflation, this monthly increase of ₹1,000 to ₹5,000 is extremely significant for employees and will certainly bring relief during this festive season. This financial decision reflects the unwavering support of the Central Government towards its employees.