Centre on Thursday notified its decision to raise dearness allowance (DA) to 125 per cent from 119 per cent, benefiting its 48 lakh central government employees and 52 lakh pensioners.
The union cabinet had decided on March 23, to release an additional instalment of DA and dearness relief (DR) to pensioners with effect from 1 January 2016. Thus, the central government employees as well as pensioners are entitled for DA/DR at the rate of 125% of the basic with effect from 1 January 2016.
“…the President is pleased to decide that DA payable to central government employees shall be enhanced from existing rate of 119% to 125% with effect from 1 January 2016,” a finance ministry’s office order said.
According to the today’s Office Memorandum No.1/1/2016-E-II (B), the additional installment of DA payable under this order shall be paid in cash to all central government employees.
In regard to armed forces personnel and railway employees, separate orders will be issued by the ministry of defence and ministry of railways, it said.
The government has estimated that the combined impact on exchequer on account of both DA and DR would be Rs 14,724.74 crore per annum.
The burden on exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17.
The Centre revised DA twice in a year on the basis of one year average of retail inflation for industrial workers as per the accepted formula.
Earlier in September last year, DA was increased to 119 percent from 113 percent which was effective from July 1, 2015.
In April last year, the government had hiked DA by 6 percentage points to 113 percent of their basic pay with effect from January 1, 2015.
The increase in DA is in accordance with the accepted formula based on the recommendations of the 6th Central Pay Commission.
However, the central government is going to start the 7th Pay Commission award in July, which will be effective from January 2016.