Union Cabinet Approves 3% Dearness Allowance Hike
Effective from July 1, 2024
The Union Cabinet, led by Prime Minister Narendra Modi, has approved a 3% increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. This decision was announced by Union Minister Ashwini Vaishnaw during a press briefing. The hike, effective from July 1, 2024, raises the existing rate from 50% to 53% of the Basic Pay/Pension.
This adjustment aims to help employees and pensioners cope with the rising cost of living. The increase follows the recommendations of the 7th Central Pay Commission and will benefit approximately 49.18 lakh employees and 64.89 lakh pensioners. The financial impact on the government is estimated to be Rs. 9,448.35 crore annually.
Background on Dearness Allowance
Dearness Allowance and Dearness Relief are revised twice a year, on January 1 and July 1, based on the All India Consumer Price Index for Industrial Workers. This ensures that the basic pay and pension of government employees and pensioners are protected from inflation. With the hike effective from July 2024, employees will receive arrears for the months of July, August, and September.
Doubts Revealed
Union Cabinet -: The Union Cabinet is a group of top government officials in India, led by the Prime Minister. They make important decisions for the country.
Dearness Allowance (DA) -: Dearness Allowance is extra money given to government employees to help them cope with rising prices. It is a percentage of their basic salary.
Dearness Relief (DR) -: Dearness Relief is similar to Dearness Allowance but is given to retired government employees, called pensioners, to help them with inflation.
Prime Minister Narendra Modi -: Narendra Modi is the current Prime Minister of India. He leads the government and makes important decisions for the country.
Union Minister Ashwini Vaishnaw -: Ashwini Vaishnaw is a minister in the Indian government. He is responsible for announcing important decisions like the DA hike.
Basic Pay/Pension -: Basic Pay is the main part of a government employee’s salary, without any extra allowances. Pension is the money given to retired employees every month.
Financial impact -: Financial impact refers to the total cost of the DA and DR hike, which is Rs. 9,448.35 crore per year. This is the extra money the government will spend.
Arrears -: Arrears are the payments that are due for past months. In this case, it means the extra money for July, August, and September will be paid later.
