Published On: Fri, Nov 4th, 2016

Centre notifies 2 per cent Dearness Allowance

New Delhi: Centre today notified its decision to give 2 per cent Dearness Allowance to its employees and pensioners.

FM Arun Jaitley moved the cabinet note on approval for 2 per cent Dearness Allowance (DA) in the union cabinet on October 27.

FM Arun Jaitley moved the cabinet note on approval for 2 per cent Dearness Allowance (DA) in the union cabinet on October 27.

The Finance Minister Arun Jaitley moved the cabinet note on approval for 2 per cent Dearness Allowance (DA) in the union cabinet on October 27 and the cabinet gave its nod, which to be effective from July 1, 2016.

The notification to provide 2 per cent Dearness Allowance and Dearness Relief to 5.2 million central government employees and 5.8 million pensioners respectively.

“…the President is pleased to decide that Dearness Allowance (DA) payable to all categories of central government employees shall be admissible at the rate of 2 percent of basic pay per month w.e.f. 01.07.2016,” a finance ministry’s office order said.

According to the today’s Office Memorandum No.1/2/2016-E-II (B), the term ‘basic pay’ in the revised pay structure means the pay drawn in the prescribed Level in the Pay Matrix but does not include any other type of pay like special pay, etc.

In regard to armed forces personnel and railway employees, separate orders will be issued by the ministry of defence and ministry of railways, it said.

Dearness allowance and Dearness Relief is provided to employees and pensioners to neutralise the impact of price rise on their earnings.

Earlier this year the government hiked Dearness Allowance by 6 per cent to 125 per cent of the basic pay. 125 percent Dearness Allowance (DA) was later merged into the basic pay following implementation of 7th Pay Commission award.

The central government employee unions want that the DA should be increased by 3 per cent and not 2 per cent which has been notified by the central government.

As per the agreed formula, government increases DA on the basis of 12-month average of the retail inflation and does not consider the price rise rate beyond decimal point for deciding the rate of dearness allowance.

The average rate of retail inflation from July 2015 to June, 2016 was 2.92 per cent. Thus, the government notified dearness allowance by two as per accepted formula for calculation.

TST

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