In a welcome development for employees and pensioners, the central government today hiked dearness allowance by 1 percent. The dearness allowance was 4 percent, and now it has been increased to 5 percent. The move will benefit nearly 1.1 crore employees and pensioners. The decision to hike the dearness allowance was taken today during the Union cabinet meeting that was chaired by Prime Minister Narendra Modi. An official statement released by the government read, “Release of additional installment of DA is an increase of 1 per cent over the existing rate of 4 per cent of the basic pay/pension, to compensate for price rise.”
The increased rate of dearness allowance will come into effect from July 1. The beneficiaries include around 49.26 lakh central government employees and 61.17 lakh pensioners. The government said that the overall impact on the exchequer due to the DA and DR will be Rs 3,068.26 crore per annum and Rs 2,045.50 crore in the financial year 2017-18 (for a period of 8 months from July 2017 to February 2018). The cabinet has also finalized the launch of Payment of Gratuity (Amendment) Bill, 2017 in Parliament. This will effectively revise the gratuity limit for private sector employees.