Addressing a press conference, Javadekar said the hike in Dearness allowance will cost the government Rs 16,000 crore annually and that it is a Diwali gift for over 50 lakh central government employees and 65 lakh pensioners.
In a Diwali gift to central government employees and pensioners, the Narendra Modi government has increased the dearness allowance for employees by 5 per cent. The hiked rate will be applicable retrospectively from July this year.
The government on Wednesday hiked dearness allowance (DA) given to central government employees by five per cent in what seems to be a move aimed at reviving consumer demand amid an economic slowdown.
What Is Dearness Allowance:
The Dearness Allowance (DA) is a cost of living adjustment allowance paid to government employees, public sector employees (PSE) and pensioners in India, Bangladesh and Pakistan.
DA is calculated as a percentage of an Indian citizen’s basic salary to mitigate the impact of inflation on people. Indian citizens may receive a basic salary or pension that is then supplemented by housing or a dearness allowance, or both. The guidelines that govern the DA vary according to where one lives. DA is a fully taxable allowance. Two types: 1) DA gave under terms of employment 2) DA not given under the terms of employment
Union minister Prakash Javadekar made the announcement after a cabinet meeting on Wednesday.
Addressing a press conference, Javadekar said the hike in DA will cost the government Rs 16,000 crore annually and that it is a Diwali gift for over 50 lakh central government employees and 65 lakh pensioners. The move will be effective from July 2019.
“Under the leadership of Prime Minister Modi, several decisions have been taken and good news for govt employees is that DA has been hiked by 5 per cent,” he said.
Javadekar said that the move will offer relief to the working class and that the government will continue to announce measures for addressing issues that many sectors are facing due to the slowdown in demand.
How To Calculate DA:
The formula for calculating DA for Central government employees after 1.1.2006 is :
Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 12 months – 115.77)/115.77}*100
The formula for calculating DA for Central public sector employees after 1.1.2007 is :
Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 3 months – 126.33)/126.33}*100
Dearness allowance with effect from January or July of a particular year in the future, once the AICPI(IW) for a particular month is published by the Government, whereas for PSU employees it is declared quarterly by DPE (Department of Public Enterprise).
