Published On: Thu, Jan 31st, 2019

Centre to hike DA by 3% from 1 January

New Delhi: The Centre is likely to announce a hike of 3% in dearness allowance (DA) for its about 48.41 lakh employees and 61.17 lakh pensioners in the month of March. The hike will be effective from January 1, 2018.

The centre is likely to DA by 3% over the existing rate of 9%.

Dearness allowance and dearness relief are provided to employees and pensioners to neutralise the impact of inflation on their earnings.

The average consumer price index for industrial workers (CPI-IW) to be taken into account for raising DA is 12.78% from 1 January to 31 December, 2018.

Since the government has already hiked the dearness allowance by 9% in August last year from 1 July , 2018, it will now raise it further by 3%.

As per an agreed upon formula, the Centre hikes the allowance taking 12-month average of retail inflation. The government does not consider the price rise rate beyond a decimal point for deciding the rate of the dearness allowance. Therefore, despite the fact that the total hike works out to be 12.78%, the government will ignore the rate of price rise beyond decimal point and the DA will be given 12 per cent of the basic pay from January 2019.

The dearness allowance is paid as proportion of the basic pay of the central government employees.

Earlier last year March, the government hiked DA from 5 per cent to 7 per cent of basic pay.

At present the central government employees and pensioners are entitled to 9% dearness allowance, which was effected from 1 July , 2018.


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