The Modi Government has given the approval to hike 4% additional Dearness Allowance to all categories of Central Government Employees with effect from 1.1.2020. As a result, the total DA has increased to 21% from the existing level of 17%.
After 1.1.2016, the Dearness Allowance is calculated based on the recommendation of the 7th Pay Commission, particularly on the fluxations of the Consumer Price Index of essential commodities.
The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01.2020. There will be an increase of 4 percent over the existing rate of 17 percent of the Basic Pay/Pension, to compensate for price rise.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.12,510.04 crore per annum and Rs.14,595.04 crore in Financial Year 2020-21 (for a period of 14 months from January, 2020 to February, 2021). It will benefit about 48.34 lakh Central Government employees and 65.26 lakh pensioners.
The increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.
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