New Delhi, March 8: The Union Cabinet led by PM Modi has approved a hike in dearness allowance and dearness relief by 2% for central government employees and pensioners.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. This will benefit about 48.41 lakh Central Government employees and 61.17 lakh pensioners.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.6077.72 crore per annum and Rs.7090.68 crore in the financial year 2018-19 (for a period of 14 months from January, 2018 to February, 2019).
The existing dearness allowance - paid as proportion of the basic pay of central government employees or pension is 5%.
Dearness allowance and dearness relief are provided to employees and pensioners to neutralise the impact of inflation on their earnings.