The Centre today increased Dearness Allowance (DA) and Dearness Relief (DR) to 4 per cent from existing 2 per cent, effective from January 1, 2017, benefiting 48.85 employees and 55.51 lakh pensioners.
"The Union Cabinet, chaired by the Prime Minister Narendra Modi has approved release of an additional installment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01.2017. It has increased by 2 per cent over the existing rate of 2 per cent of the Basic Pay/Pension, to compensate for price rise," an official statement said.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, the government said.
This hike in DA/DR will benefit 48.85 lakh central government employees and 55.51 lakh pensioners, it said.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs. 5,857.28 crore per annum and Rs.6,833.50 crore in the Financial Year 2017-18 (for a period of 14 months from January, 2017 to February, 2018), the statement said.
The hike in the DA/DR is as per the agreed methodology of taking average of Consumer Price Index-Industrial Workers for the past 12 months.
The Confederation of Central Government Employees had termed it as a meagre hike in view of actual rise in cost of living index saying the CPI-IW was far from reality.
The union had also said that there was a lot of variation in the rates of price rise of commodities by Ministry of Agriculture and CPI-IW.