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Business News/ Money / Personal Finance/  Central government likely to increase dearness allowance to 45% for employees and pensioners
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Central government likely to increase dearness allowance to 45% for employees and pensioners

Indian government likely to increase dearness allowance for employees and pensioners by 3% to 45% from existing 42%.

Central government to increase DA for employees, pensioners by 3% (Photo: Reuters) (MINT_PRINT)Premium
Central government to increase DA for employees, pensioners by 3% (Photo: Reuters) (MINT_PRINT)

The central government is likely to increase the dearness allowance (DA) for its over 1 crore employees and pensioners by 3 percentage points to 45% from the existing 42%, as per the agreed formula for the purpose.

The decision is likely to be taken by the Union Cabinet soon, after the expenditure department of the Finance Ministry formulates a proposal to hike DA along with its revenue implication. The proposal will then be put up before the Cabinet for approval.

Dearness Allowance Revision

The DA is revised twice a year, in January and July, based on the Consumer Price Index for Industrial Workers (CPI-IW). The latest CPI-IW data for June 2023 shows that inflation has risen by 3.24% in the past one month. This means that the DA is likely to be increased by 3%.

The DA hike will be effective from July 1, 2023. This will mean that central government employees and pensioners will get an additional 3% of their basic pay as DA.

The DA hike is a welcome relief for central government employees and pensioners, who have been facing rising inflation in recent months. The increase in DA will help them to meet the rising cost of living.

The DA is provided to employees and pensioners to compensate them for the rising cost of living. The CPI-IW is a measure of the prices of goods and services that are commonly purchased by industrial workers. The DA is calculated by taking the average of the CPI-IW for the past 12 months.

DA hike impact

The DA hike is likely to have a positive impact on the economy. It will boost the spending power of central government employees and pensioners, which will lead to increased demand for goods and services. This will help to create jobs and boost economic growth.

The DA hike is also likely to have a positive impact on the stock market. Central government employees and pensioners are a large group of investors, and the DA hike will give them more money to invest. This will lead to increased demand for stocks, which will push up stock prices.

Overall, the DA hike is a positive development for the economy. It will help to boost spending, create jobs, and boost stock prices.

 

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Published: 07 Aug 2023, 08:59 AM IST
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