The Union Cabinet on Thursday hiked dearness allowances (DA) and dearness relief (DR) for central government employees and pensioners by 3 percentage points to 31% of basic pay/pension, which will cost the exchequer an additional about Rs 7,100 crore for the July-March period of FY22.
The combined impact on the exchequer on account of both DA and DR would be Rs 9,489 crore per annum, union information and broadcasting minister Anurag Thakur said. The revised DA/DR will be paid from July 1, 2021, i.e., for nine months in FY22. The revised DA/DR will benefit 47.14 lakh union government employees and 68.62 lakh pensioners.
On July 14, the Centre had hiked DA and DR for government employees and pensioners by 11 percentage points to 28% of basic pay/pension, which would cost the exchequer an additional about Rs 25,800 crore for the July-March period of FY22. The increase reflected the three additional instalments that were frozen.
Given the unprecedented situation which arose due to the Covid-19 pandemic, three additional instalments of DA and DR due from January 1, 2020, July 1, 2020, and January 1, 2021, had been frozen.
The DA/DR enhancements will likely support consumption in the economy as the state governments also conventionally follow the Union government’s pattern on DA/DR.