New Delhi: The Union Cabinet today approved the release of an additional instalment of dearness allowance (DA) for central government employees and dearness relief to pensioners with effect from 1 July, 2018. This move, to compensate for the price rise, will result in an increase of 2% over the existing rate of 7% of the basis pay or pension. About 48.41 lakh central government employees and 62 lakh pensioners will be benefited because of the DA hike.

The decision was taken at the Cabinet meeting chaired by Prime Minister Narendra Modi in New Delhi. The combined impact to the government exchequer on account of both DA and dearness relief would be 6,112 crore per annum and 4,074 crore in the financial year 2018-19 (for a period of eight months, from July 2018 to February 2019), the government said in a statement.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

In March this year, the Union Cabinet had increased dearness allowance (DA) for government employees and pensioners to 7% from 5%, with effect from 1 January 2018. The DA hike was in accordance with a formula based on the recommendations of the 7th Pay Commission for central government employees.

In another Cabinet decision today, the government approved revised cost estimate for setting up of India Post Payments Bank from 800 crore to 1,435 crore.

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