[ecis2016.org] The government’s move to increase the dearness allowance is likely to benefit as many as 10 million government employees and pensioners
In a move that could spur demand and provide some cushion for the economy against the severe beating it has taken, because of the second wave of the Coronavirus pandemic, the government, on July 14, 2021, hiked the dearness allowance (DA) and the dearness relief (DR) for central government employees. Effective from July 1, 2021, the central government has increased the DA and DR from 17% of the basic pay/pension to 28%.
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Dearness allowance is a component of your salary, which is aimed at hedging the impact of inflation. A certain percentage of your basic salary makes up for the dearness allowance. While the hike in DA will increase the disposable income in the hands of government employees, the increase in DR will do the same for government pensioners.
“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% over the existing rate of 17% of the basic pay/pension,” an official release noted.
The move is likely to benefit as many as 10 million government employees and pensioners – 4.8 million employees with the central government and 6.5 million pensioners. This move by the government, which is likely to cost the exchequer an estimated Rs 34,400 crores, comes ahead of the festive season that would start in August.
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Recall here that the centre had frozen DA hikes, which were due from January 1, 2020, July 1, 2020 and January 1, 2021, because of the financial stress caused by the Coronavirus pandemic. “In view of the crisis arising out of COVID-19, it has been decided that the additional installment of dearness allowance payable to central government employees and dearness relief to central government pensioners, due from January 1, 2020, shall not be paid. Additional installments of DA and DR from July 1, 2020 and January 1, 2021, shall also not be paid,” the Finance Ministry had said, in a memo at that time.
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