Cabinet approves 2% Dearness Allowance for central govt employees

Giving nearly 50 lakh central employees and 58 lakh pensioners a reason to cheer ahead of Diwali, the cabinet has approved a 2% Dearness Allowance (DA).

Dearness allowance and dearness relief is given to government employees and pensioners to effectively neutralise the impact of price rise on their earnings. Earlier this year, the DA allowance was hiked by 6% to 125% of the basic pay and was later merged into the basic pay following the implementation of the 7th pay commission. 

The 2% hike might be met with disappointment as the central government employee unions wanted the DA to be increased by 3%. President of the Confederation of Central Government Employees, K K N Kutty, spoke to PTI about the 2% hike, saying, "The 12-month average of Consumer Price Index for Industrial Workers from July 1, 2015 to June 30, 2016, works out to be 2.92%. Therefore the unions had pressed for 3% DA. We are not satisfied with this."

Earlier this year, the Odisha government had announced a 6% hike from 119% to 125%, in DA and Dearness Relief (DR) which would have burdened the exchequer by an additional Rs 676.90 crore annually. Similarly, the Bihar government's hike to 125% would have put an additional burden of Rs 842 crore on the state exchequer.