Dearness Allowance hiked by 2% but labour unions say it's not enough

The Union Cabinet on Wednesday approved 2% hike in Dearness Allowance (DA) in a move that will benefit 50 lakh government employees and 58 lakh pensioners. 

However, trade unions cried foul saying that the hike wasn't enough. 

Dearness Allowance is paid to government employees and pensioners to negate the impact of inflation on their earnings. 

According to a report by Zee News, labour unions said the hike was not enough to offset the inflationary rise. 

In 2016, the government had hiked the Dearness Allowance by 6% to 125% of basic pay. It is calculated by taking the 12-month average of retail inflation, according to the report. 

The  impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 5,857.28 crore per annum and Rs 6,833.50 crore in the Financial Year 2017-18 (for a period of 14 months from January, 2017 to February, 2018).  A government release said the  increase was in accordance with the accepted formula, based on the recommendations of the 7th Central Pay Commission.