3% Dearness Allowance hike to central govt employees effective from July 1

Dearness allowance for the central government employees has been increased from 28% to 31% of basic pay with effect from July 1, 2021, according to the Finance Ministry.

The Finance Ministry’s Department of Expenditure stated in an office memorandum that the phrase “basic pay” refers to the pay drawn according to the 7th pay commission matrix and excludes any other sort of compensation such as special pay.

“With effect from July 1, 2021, the Dearness Allowance payable to central government personnel shall be increased from the existing rate of 28 percent to 31 percent of basic salary,” according to an office memorandum dated October 25.

The increase will also apply to civilian employees paid by the Defence Services, while separate orders will be issued by the Defence and Railways Ministries, respectively, for Armed Forces troops and Railway employees.

Last week, the Union Cabinet approved a 3% increase in dearness allowance (DA) for central government employees and dearness relief (DR) for retirees over the current rate of 28 percent.

About 47.14 lakh central government employees and 68.62 lakh retirees will benefit from the decision.

The DA rate was raised from 17 to 28 percent in July of this year. With a 3-percentage-point increase, the DA rate will rise to 31%.

The total impact of the Dearness Allowance and Dearness Relief on the exchequer would be Rs 9,488.70 crore.

Following the COVID epidemic, the government postponed the payment of three additional DA and DR instalments that were scheduled on January 1, 2020, July 1, 2020, and January 1, 2021. From July 1, 2021, the freeze was lifted, and the DA, DR rate was increased by 11 percentage points to 28%.