DA hike to be effective from January 2011: Govt

The hike in dearness allowance of central government employees will be implemented from January this year, the Finance Ministry has said today.

"The dearness allowance payable to central government employees shall be enhanced from the existing rate of 45% to 51%with effect from 1 January, 2011," said a statement issued by the Ministry.

The additional installment of dearness allowance (DA) payable under these orders shall be paid in cash to all Central Government employees, it added.

However, DA arrears accumulated for the months of January and February, 2011 cannot be paid before the disbursement of salary for the current month.  

The decision to increase DA by 6% will benefit over 50 lakh central government employees and 38 lakh pensioners. Presently, the DA is paid at 45% of the basic pay.

The Government's decision to increase DA is in accordance with the Sixth Pay Commission prescription for central government employees.
The DA is revised twice a year, on January 1 and July 1.

The combined impact of the hike will be Rs 5,715.90 crore per annum. However, in the next financial year, the burden on the exchequer would be Rs 6,668.52 crore after the additional 6 per cent DA payout is factored in from January 1 to March 31 this year.

The DA hike comes at a time when the food inflation has again climbed to double-digit level, at 10.05% for the week ended March 12 from 9.42% in the previous week.

Headline inflation, based on the movement in wholesale prices, was recorded at 8.31% for February, much above the comfort level of 5-6%.

The Consumer Price Index (Industrial Workers), which is the basis for revising dearness allowance, was 9.47% in December and 9.30% in January.