Modi Government Approves 3% Dearness allowance Increase Ahead of Diwali: What This Means ?

In a notable pre-festive gesture, the Union Government has sanctioned a 3% hike in Dearness Allowance (DA) for central government employees just as Diwali approaches. The announcement, aimed at invigorating the workforce, promises direct financial benefits for millions of government staff and pensioners nationwide. Union Minister Ashwini Vaishnaw revealed at Wednesday's Cabinet briefing that the adjustment would take effect from July 1, 2024.

Additionally, pensioners will see a corresponding 3% increase in Dearness Relief (DR). The cumulative cost to the exchequer from both DA and DR adjustments is projected at Rs 9,448.35 crore annually. This increase aligns with the 7th Central Pay Commission's recommendations and is based on an established formula, benefiting around 49.18 lakh employees and 64.89 lakh pensioners.

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Understanding Dearness Allowance

Dearness Allowance acts as a protective economic buffer for government employees, compensating for rising living costs. Tied to the Consumer Price Index for Industrial Workers (CPI-IW), DA is updated biannually, typically in January and July. In March 2024, the government raised DA by 4%, reaching 50% of the base pay, with a parallel 4% rise in DR. This recent hike raises DA to 42% of basic salary, a meaningful lift from prior levels.

Impacts of the DA Hike

The 3% DA increase offers timely financial relief, particularly during Diwali, when families often experience additional spending for gifts and celebrations. This boost enhances employees' disposable income; for example, an employee with a base salary of Rs 30,000 will receive an extra Rs 900 monthly, taking their total salary to Rs 12,600 (in addition to base pay). Pensioners will also benefit, ensuring financial support for retired government personnel as well.

published by dailybharat