Published On: Wed, Mar 23rd, 2016

Centre announces 6 per cent DA hike on Holi eve

New Delhi: Central government today today announced 6 per cent hike in dearness allowance (DA), taking it to 125 per cent of basic pay, a move that will benefit around 48 lakh central employees and 52 lakh pensioners including dependents on the eve of Holi.

Finance Minister Arun Jaitley

Finance Minister Arun Jaitley

“The Union Cabinet chaired by Prime Minister Narendra Modi, today gave its approval for the release of an additional instalment of DA to central government employees and Dearness Relief (DR) to pensioners with effect from January 1, 2016. This is an increase of six per cent over the existing rate of 1119 per cent of the Basic Pay/Pension, to compensate for price rise,” a press statement said here.

The increase is in accordance with the accepted formula, which is based on the recommendations of the Sixth Central Pay Commission, it said.

The hike, which will cost the exchequer an additional Rs 14,724.74 crore annually,  Telecom Minister Ravi Shankar Prasad told reporters after the meeting of the Union Cabinet which took the decision.

The burden on exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17, he said.

As per the practice, the dearness allowance is worked out on the basis of 12 month average of Consumer Price Index for Industrial Workers (CPI-IW).

The average rate of retail inflation for industrial workers from January 1, 2015 to December 31, 2016 was 6.73 per cent per cent.

Therefore, the central government decided to hike dearness allowance for it employees by 6 per cent.

The Centre revised DA twice in a year on the basis of one year average of retail inflation for industrial workers as per the accepted formula.

Earlier in September last year, DA was increased to 119 percent from 113 percent which was effective from July 1, 2015.

In April last year, the government had hiked DA by 6 percentage points to 113 percent of their basic pay with effect from January 1, 2015.

However, the central government is going to start the 7th Pay Commission award in July, which will be effective from January 2016.


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