Published On: Sun, Feb 2nd, 2020

Centre to increase dearness allowance to 21%, up from 17%

New Delhi: Central government is likely to approve a hike in dearness allowance (DA) to 21 per cent from the existing 17 per cent, benefiting around 49.93 lakh Central government employees and its 65.26 lakh pensioners including dependents.

The Central government is likely to announce in February 2020 or March 2020 an increase of 4 percentage points to 21 percent in dearness allowance and dearness relief.

“The average rate of retail inflation for industrial workers from January 1, 2019 to December 31, 2019 works out to be 4.43 per cent.

Thus the central government will hike dearness allowance for it employees by 4 per cent,” an official said.

“The DA hike could be officially announced in the month February 2020 or March 2020,” he added.

He said the Finance Ministry will now put a Cabinet proposal for approval of 4 per cent DA hike from January 1 this year as the revised Consumer Price Index-Industrial Workers data for December was released by Labour Ministry on Friday.

With increase in DA, the pensioners will also gain as the benefit provided to them as dearness relief will be hiked to 21 per cent of basic pension.

At present the central government employees and pensioners are entitled to 17 per cent dearness allowance, which was effected from July 1, 2019.

The central government hikes the dearness 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.

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

The Dearness allowance and dearness relief are revised twice a year from 1 January and 1 July.


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