Cabinet's decision of 6 per cent hike in dearness allowance will benefit over one crore government employees and pensioners.
The Union Cabinet on Wednesday approved a proposal to increase dearness allowance by 6%, for central government employees and pensioners.
The new DA would be 119% from 113% earlier, and would benefit more than 1 crore central government employees. It would be effective from July 1.
The increase in dearness allowance, or a pay correction to employees to adjust the rising cost of living expenses, would help the broader economy too.
The increase comes during the festive season, and the additional money could spur consumer spending, at a time when the economy is slowing down, with lower sales of cellphones to cars. This could in turn boost the government’s tax collections as well.