In developments pertaining to DA Hike, the Cabinet on Wednesday approved the dearness allowance hike for the Central govt employees. The cabinet, which is currently led by the current Prime Minister Narendra Modi, approved hike for government employees and the move is expected to cost Rs. 34,000 crores. The announcement came during the 7th Pay Commission.
On Wednesday, the Union Cabinet announced the long-awaited hike in the Dearness Allowance and the Dearness Relief to the Central government employees. For the uninitiated, Dearness Allowance or DA is given to the central government employees while the Dearness Relief or DR is provided to the pensioners. As per Anurag Thakur, who’s the current Minister of Sports, Youth Affairs and Information and Broadcasting Minister, the move will benefit about 1.14 crore employees and pensioners.
“Now, the central government has decided to increase the dearness allowance to central government employees and dearness relief to the pensioners with effect from July 1, 2021 to 28 per cent, representing an increase of 11 per cent over the existing rate of 17 per cent of the basic pay or pension,” Anurag Thakur was quoted saying.
How Much Hike Will Central Govt Employees Get?
Currently, all the Central government employees get a 17% DA. With the new changes coming into effect from July, the same employees will be getting a 28% DA. Let’s try to understand it with an example. If employee A’s salary is 20% than the DA currently will be Rs. 3,400. After the new hike, the employees will get a 28% DA and their DA amount will be Rs. 5,600 per month.
Till now, the last 3 installments of the DA were frozen due to the pandemic situation – 4% from Jan 20 to June 20, 3% from July, 20 to Dec 20, 4% from Jan 21 to June 21. In the Wednesday’s announcement, the government announced that the revision in DA will be done frum July.
In its release the government added, “The rate of Dearness Allowance/Dearness Relief for the period 01.01.2020 to 30.06.2021 shall remain at 17%.”
This in a nutshell means that arrears for Jan 20 – June 21 will not be paid by the government. The employees will lose their 4% of DA for Jan, 20 – June 20, 7% of DA for July 20 – Dec 21 and 11% of DA between Jan, 21 – June, 21.
Why was the DA, DR Frozen in 2020?
Earlier last year, the government had announced freezing any hike in DA or DR till June 30, 2021 owing to the COVID-19 pandemic. The government had indeed announced a 4% hike in the Dearness Allowance to a 21% but the hike was never implemented.
The government in its announcement had said, “In view of the crisis arising out of Covid-19, it has been decided that the additional instalment of dearness allowance payable to central government employees and dearness relief to central government pensioners due from 1st January 2021 shall not be paid.”
Other Things You May Want to Know about DA/DR Hike
1. DA is an element of the salary for all the Central Government employees that cushions them against rising inflation rates.
2. The DA is usually revisited twice every year – once in the starting of the year in January and once in July.
3. The new hike in DA and DR will put an annual burden of Rs. 34,401 crores on the government treasury.
4. Meanwhile, this year, the hike will cost Rs. 22,944 crores from July 21-February 22.
5. The significant hike to 28% takes into consideration of the times when the DA was not revisited last year in July 20 and this year in January 21.