Government Raises Dearness Allowance to 50% for Central Employees and Pensioners
Union Cabinet Approves Significant Hike in Dearness Allowance Effective from January 2024
New Delhi, 07-03-2024 : The Centre announced a significant hike in Dearness Allowance (DA) for its employees, increasing it to 50% of the basic pay effective from January 1, 2024. This move, approved by the Union Cabinet, stands to benefit over 1 crore employees and pensioners ahead of the general elections. Union Minister Piyush Goyal confirmed the decision, stating that the hike represents a 4-percentage-point increase over the existing rate of 46%.
The additional instalment of DA and Dearness Relief (DR) is aimed at compensating against the rising prices. The combined impact on the exchequer, accounting for both DA and DR, is estimated to be Rs 12,869 crore per annum. This figure is projected to rise to Rs 15,014 crore during the fiscal year 2024-25, from January 2024 to February 2025.
In addition to the increase in DA, various allowances such as transport allowance, canteen allowance, and deputation allowance have been raised by 25%. House Rent Allowance (HRA) has also been increased from 27%, 19%, and 9% of basic pay to 30%, 20%, and 10%, respectively. Moreover, benefits under gratuity have been enhanced by 25%, with the ceiling raised to Rs 25 lakh from the existing Rs 20 lakh. These adjustments are expected to impose an annual burden of Rs 9,400 crore on the exchequer.
The decision to increase DA and DR aligns with the recommendations of the 7th Central Pay Commission and is set to benefit 49.18 lakh central government employees and 67.95 lakh pensioners. The move reflects the government’s commitment to addressing the economic concerns of its employees and pensioners amidst the prevailing inflationary pressures.
