Ahead of Diwali, the Union Cabinet on Thursday (October 21) approved a proposal to hike the Dearness Allowance (DA) of the central government employees and Dearness Relief (DR) given to pensioners by 3% with effect from July 1, 2021, sources told ET Now. With this hike, central government employees will now get 31% DA from July. 

The increase of 3 percent is over the existing rate of 28 percent of the basic pay/pension. The move will benefit about 47.14 lakh Central government employees and 68.62 lakh pensioners. It will cost the exchequer Rs 9,488.70 crore per annum. 

Union minister Anurag Thakur made the announcement and said that this will benefit at least 47 lakh central government employees and 68 lakh central government pensioners.

He said that the annual cost to the government will be 9,488 crores. “The dearness allowance has been increased from 28% to 31%. From July 1, 2021, it will be implemented and 47.14 lakh central government employees will benefit from this,” Thakur said.

The Centre earlier in July hiked the dearness allowance for its employees by 11% to 28%. The dearness allowance was earlier being paid at the rate of 17%. Central government employees are also likely to see an increase in their travel allowance, provident fund, gratuity for retirement, and city allowances.

PF Interest: In the meantime, over 6 crore Central government employees and pensioners who are the account holders of the Employees’ Provident Fund Organisation (EPFO) can also receive good news before Diwali. Reports claim that the EFPO subscribers can receive the interest money on their investments direct in their bank accounts in this festive season. Reports claimed that the EPFO could soon announce the transfer of interest to the accounts of its subscribers for the 2020-21 period.

Meanwhile, The Central government employees belonging to the India Post department will get only half a bonus this Diwali. As per updates, the Central government had refused to grant them 120 days bonus.