7th pay commission: Centre hikes dearness allowance by 3%, move to benefit 1.1 crore employees, pensioners

The decision in this regard was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi.

The Union Cabinet Tuesday increased the dearness allowance by 3 per cent effective from January 1, 2019, a move which will benefit 1.1 crore central government employees and pensioners.

The decision in this regard was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi.

The Cabinet has approved additional DA of 3 per cent over the existing rate of 9 per cent to government employees and dearness relief to pensioners from January 1, 2019, Finance Minister Arun Jaitley told reporters after the Cabinet meeting.

The hike will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners.

Read: Good news for Government employees

This increase is in accordance with the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission.

Earlier in August 2018, the Union Cabinet approved additional two per cent hike in the Dearness Allowance (DA) and Dearness Relief (DR), a move that had benefited approximately 1.1 crore central government employees and pensioners.

The impact on the exchequer on account of both the DA and DR would be Rs 6,112.20 crore per annum and Rs 4,074.80 crore in the financial year 2018-19 (8 months from July, 2018 to February, 2019). The hike will be effected from July 1, 2018, the government press release had earlier read. 

It may be recalled that in March 2018, the Union Cabinet had increased DA for government employees and pensioners to seven per cent from five per cent, with effect from 1 January 2018. The DA hike was in accordance with a formula based on the recommendations of the 7th Pay Commission for central government employees. In another Cabinet decision today, the government approved revised cost estimate for setting up of India Post Payments Bank from Rs 800 crore to Rs 1,435 crore.