Prime Minister Narendra Modi-led Union cabinet is due to revise dearness allowance (DA) for the second half of this year. The cabinet is likely to increase DA for all central government employees and pensioners to factor in the rising inflation rates since February 2022, and the increase in prices of essential commodities, an NDTV report said, adding that the hike is likely to be between 3% and 4%.
Each year, the allowance is revised in January and July, but the announcements are made only in March and September respectively. Also, there was no DA hike between January and June 2021 due to the Covid-19 pandemic. The allowance was increased in July last year.
What is dearness allowance?
Dearness allowance is actually a component of a central government employee’s monthly salary, paid to compensate for the increase in the cost of living due to inflation. The Centre decides the DA rate from time considering the retail inflation rates.
Besides government staff, family pensioners are also eligible for this benefit. At present, around 47 lakh central government employees and 68.62 lakh pensioners are getting benefits of DA.
Some recent DA announcements
(1.) On Tuesday, the Tripura government cleared a proposal to give 5% hike (3% to 8%) to its staff ahead of next year’s assembly elections.
(2.) The Madhya Pradesh government, on August 1, raised allowance by 3% (31% to 34%), that will come into effect from September, when monthly salary for August will be disbursed.
(3.) On March 30, the Centre announced a rise of 3% (31% to 34%) for its staff, effective from January 2022.
(4.) In October last year, ahead of Diwali, the rate was increased by 3% (from 28% to 31%), with effect from July that year.
(5.) In July 2021, the DA was hiked by a massive 11%, from 17% to 28%.