The central government on Wednesday declared to hike dearness allowance (DA) by 4 per cent. The decision was taken in the Union Cabinet meeting, according to news reports. The 4 per cent hike will take the DA to 38 per cent.
This is the second time in 2022 that DA has been hiked for the central government employees. The Union Cabinet in March approved to increase 3 per cent in DA under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income.
News agency ANI in a tweet said that Union Minister Anurag Thakur in a press meet announced the Cabinet decisions on Wednesday.
Delhi | Union cabinet has also decided to increase Dearness Allowance (DA) by 4 per cent for central government employees and pensioners: Union minister Anurag Thakur pic.twitter.com/a3fY12AEgC
— ANI (@ANI) September 28, 2022
Dearness Allowance (DA) and Dearness Relief (DR) are revised on the basis of retail inflation. After remaining high for the past few months, the retail inflation stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower prices food and fuel.
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The all-India CPI-IW (consumer price index for industrial workers) for June 2022 witnessed an increase by 0.2 points and came in at 129.2 points. The CPI-IW in May was 129 points.
Any changes to the DA are made as per the accepted formula, which is based on the recommendations of the 7th central pay commission to compensate for the rise in prices.
With retail inflation, or the consumer price inflation, elevated above the upper-end of the Reserve Bank of India’s target range of 2-6 per cent in each month this year, the likelihood of a bigger increase in DA was on the cards.
DA is given to government employees, while DR is for pensioners.
Over 50 lakh government employees and 65 lakh pensioners get benefitted from the DA hike.
Rohit Arora, CEO and co-founder of Biz2Credit & Biz2X, told ABP Live, “The hike in DA will come as a major relief to workers amid skyrocketing inflation. With this hike, the government is providing inflation to the employees. The value of money rises 5 to 6 per cent each year due to inflation. Apart from the public sector employees, the people who have been getting pension are also affected by the time value of money/inflation. The DA is also added up in the pension so that the retired employees can bear the inflation impact. The government’s decision to hike DA by 4 per cent, which is 34 per cent to 38 per cent, will put more money in the hands of government employees and pensioners. It will also protect their basic pay/pension from erosion in the real value.”