The Union Cabinet, led by Prime Minister Narendra Modi, authorised a sharp increase in dearness allowance (DA) and dearness relief (DR) to 28% from 17% on Wednesday, Union Minister Anurag Thakur stated.
"The government has decided to increase DA to central government employees and DR to pensioners with effect from July 1, 2021 representing an increase of 11 per cent over existing rate of 17 per cent of the basic pay/pension," a release stated.
"Cabinet approves restoring of three instalments of Dearness Allowance and Dearness Relief with effect from 01.07.2021 representing an increase of 11 per cent over the existing rate of 17 per cent of the Basic Pay/Pension. No arrears for the period from 01.01.2020 till 30.06.2021 shall be paid," the official handle of PIB tweeted.
The increase in DA and DR rates will take effect on July 1, 2021, according to the minister, and would affect 48.34 lakh central government staff and 65.26 lakh government pensioners.
"The DA rate which was 17 per cent earlier, has been risen by 11 per cent to 28 per cent," the Anurag Thakur.
Until recently, central government employees received a DA of 17% of their basic pay. Last year, the Cabinet authorised a 4% increase in DA for central employees, which was to take effect on January 1, 2021. However, owing to the pandemic, the increase was halted in April 2020.
According to Thakur, the increase in DA and DR rates will impose an additional yearly cost of roughly Rs 34,401 crore on the exchequer.
The DA and DR payments are payable on January 1, 2020, July 1, 2020, January 1, 2021, and July 1, 2021, respectively. Thakur, on the other hand, stated that the DA and DR rates will stay at 17% from January 1, 2020 to June 30, 2021.
"The rate of dearness allowance and dearness relief for the period 1st Jan 2020 to 30 Jun 2021 shall remain 17 per cent," he said.