Image Source dearnessThe Union Cabinet, led by Prime Minister Narendra Modi, agreed on Thursday the distribution of an extra tranche of Dearness Relief (DR) to pensioners and Dearness Allowance (DA) to Central Government employees. The new rate, which will take effect on January 1, 2024, will be 4% higher than the current rate, which is 46% of Basic Pay/Pension. As a countermeasure to the price increase, Dearness Relief and Dearness Allowance were increased.
Employees receive a Dearness Allowance (DA), which is a proportion of their base pay, to help offset the effect of inflation on their cost of living. It is normally modified on a regular basis, roughly every six months, to take the cost of living index into consideration.
According to the government, the increase will help 67.95 lakh pensioners nationwide and 49.18 lakh Central Government employees nationwide, but it will cost the state exchequer ₹12,868.72 crore annually.
“The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be ₹12,868.72 crore per annum. This will benefit about 49.18 lakh Central Government employees and 67.95 lakh pensioners. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” the Cabinet quoted in an official press note.
50% of Dearness Allowance is realised as per records. The house rent allowance (HRA) and the maximum gratuity will both increase as the existing Dearness Allowance reaches 50%. The amount that can be gratuitied has been increased from ₹20 lakh to ₹25 lakh.
In October 2023, the Dearness Allowance had a 4% increase, rising from 42% to 46%. According to the government, the increases follow the recommendations made by the 7th Central Pay Commission. The recent increase in the Dearness Allowance is noteworthy since it occurred right before the 2024 Lok Sabha elections, and the Model Code of Conduct (MCC) might take effect at any moment.
