7th Pay Commission News: The Centre has increased dearness allowance (DA) by 3% for central government employees to bring the key allowance to 53% of the basic pay. The last DA increase of 4% was announced in March this year.

The Union Cabinet, chaired by Prime Minister Narendra Modi, today approved 3% DA hike for central government employees and pensioners, effective July 1, according to a finance ministry release.

“This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. The combined impact on the exchequer on account of both DA and DR would be Rs 9,448.35 crore per annum,” the ministry said.

This DA hike will benefit about 49.18 lakh central government employees and 64.89 lakh pensioners.

With the latest DA hike being announced in October, employees and pensioners will receive three months’ arrears when they receive the current month’s salary ahead of Diwali.

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The Centre hikes DA twice a year, effective from January and July. However, the announcements are typically made around March and September. The January DA hike is usually announced around Holi, which falls in March, while the July hike is declared around Diwali, which usually takes place in October or November each year.

Dearness allowance is an important part of the salary of government employees, which aims to reduce the impact of inflation. It is determined on the basis of the All India Consumer Price Index (AICPI), which monitors changes in retail price.

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After the DA hike announcement got delayed, the Confederation of Central Government Employees and Workers wrote to Finance Minister Nirmala Sitharaman, drawing the government’s attention towards the delay in announcement of DA hike for employees and pensioners.

With the latest hike of 3%, the DA stands at 53%. This will greatly benefit the central government employees.

It is worth noting that states like Himachal Pradesh and Chhattisgarh have already given a gift to the state employees by increasing DA by 4% ahead of Diwali.