The approval to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners will be effective from July 2019, and this represents an increase of 5% over the existing rate of 12% of the Basic pay/Pension.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. This increase is expected to compensate for price rise, and this decision will benefit about 49.93 lakh Central Government employees and 65.26 lakh pensioners. During a Cabinet briefing on the same Union Minister Prakash Javadekar said – “This is a Diwali gift to employees,”
Dearness Allowance/Dearness Relief is paid to Central Government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value.These are revised twice a year from 1st January and 1st July.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs. 15909.35 crore per annum and Rs. 10606.20 crore in the financial year 2019-20.