Govt hikes dearness allowance by 5%

Govt hikes dearness allowance by 5%

New Delhi: Over eight million central government employees and pensioners will get an additional 5% dearness allowance (DA) that will hit the exchequer by over Rs2,900 crore this fiscal and Rs4,355 crore in a full year.

The decision to hike the dearness allowance for the employees and dearness relief for pensioners just before the festive season, was taken at the Cabinet meeting on Thursday, will create additional demand and boost the economy which is being impacted by an erratic monsoon.

The additional DA, to be given with effect from 1 July this year, will help these employees and retired people weather the impact of rising prices.

“The Cabinet has decided to release an additional installment of DA to central government employees and DA to pensioners...representing an increase of 5% over the existing rate of 22% of the basic pay, pension to compensate for price rise," Information and broadcasting minister Ambika Soni told reporters after the Cabinet meeting.

Even as the wholesale price index based inflation remains in negative zone for over three months in a row largely because of high inflation in a year-ago period, the rate of price rise based on retail prices of items consumed by industrial workers has crossed double digits, according to latest figures.