Centre hikes central govt employees' dearness allowance to 28%

The Union Cabinet on July 14 approved a hike in Dearness Allowance (DA) and Dearness Relief (DR) given to central government employees from 17 percent to 28 percent with effect from July 1, 2021. 

The move comes as a major relief and financial boost for lakhs of government employees and pensioners, which would enhance their spending ahead of the festive season.

"In view of the unprecedented situation which arose due to the COVID-19 pandemic, three additional instalments of dearness allowance to central government employees and dearness relief to pensioners, which were due from January 1, 2020, July 1, 2020 and January 1, 2021 had been frozen," said Anurag Thakur, Minister of Information and  Broadcasting and Minister of Sports and Youth Affairs while addressing the Cabinet's decision.

Now, the government has decided to increase the dearness allowance to central government employees and dearness relief to pensioners with effect from July 1, 2021 to 28 percent representing an increase of 11 percent over the existing rate of 17 percent of the basic pay/pension, Thakur added.

The decision is expected to cost the government Rs. 34, 401 crore.

An increase of 11 percent DA hike has been approved in view of the three pending installments, two from last year and one from this year.

The rate of dearness allowance for the period between January 1, 2020 and 3o June, 2021 shall remain at 17 percent.

Dearness allowance is paid by the government to its employees to compensate for the increase in the cost of living due to inflation. It is revised twice a year, on January 1 and July 1. Dearness relief is the same as allowance and is given to central government pensioners.

In April last year, the finance ministry had put on hold an increment in DA for 50 lakh central government employees and 61 lakh pensioners till June 30, 2021, due to the COVID-19 pandemic even though the Cabinet had approved a hike in DA to 21 percent a month before.

“In view of the crisis arising out of Covid-19, it has been decided that the additional installment of dearness allowance payable to central government employees and dearness relief to central government pensioners due from 1st January 2021 shall not be paid,” said an office memorandum on the website of Finance Ministry’s Expenditure Department.

The existing rates of 17 percent DA/DR will continue to be paid till July 1, 2021. From that day onwards, the new rates of DA/DR will be restored ‘prospectively’. This means there will be no arrears paid for the difference between 21 percent and 17 percent that would have accumulated between  January 1, 2020 and July 1, 2021.

On June 27 this year, the Finance Ministry had clarified that no order regarding resumption of DA for the central government employees and DR for the central government pensioners from July 1 has been issued.

The ministry said that a document claiming the same was being circulated on social media.

Taking to Twitter, the  Finance Ministry tweeted, "A document is doing rounds on social media claiming resumption of DA to Central Government employees & Dearness Relief to Central Government pensioners from July 2021. This OM is #FAKE. No such OM has been issued by GOI."