Last week, the Union Cabinet had approved an 11 percentage point hike in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners with effect from July 1, benefitting more than 48 lakh central government employees, and 65 lakh pensioners.
With this, the new DA rate will be 28 per cent, up from 17 per cent.
In an office memorandum, the Department of Expenditure under the Finance Ministry said the DA payable to central government employees shall be enhanced from the existing rate of 17 per cent to 28 per cent of basic pay. The increase subsumes the additional instalments arising on January 1, 2020; July 1, 2020, and January 1, 2021.
“These orders shall also apply to the civilian employees paid from the Defence Services Estimates,” it said, adding for Armed Forces personnel and Railway employees separate orders will be issued by the respective ministries.
In April last year, the Finance Ministry had put on hold an increment in dearness allowance (DA) till June 30, 2021, due to the COVID-19 pandemic. The rate of DA from January 1, 2020, to June 30, 2021, was 17 per cent.
With the Dearness Allowance (DA) being restored under the 7th Pay Commission for Central Government employees, meanwhile, there is more good news with reports stating that the House Rent Allowance (HRA) will also be increased.
In the order issued on July 7, 2017 the Department of Expenditure stated that when the house rent allowance shall be hiked beyond 25 percent, House Rent allowance will also be revised. Now as the dearness allowance has been hiked since July 1 to 28 pecent, HRA will also be revised.
The Central Government has increased the dearness allowance of its employees from 17% to 28%, after this announcement, while it has also purportedly increased the house rent allowance or HRA increment to 27%. In fact, the Department of Expenditure is believed to have issued an order on 7 July 2017 in which it was said that when dearness allowance will exceed 25% bracket and hence the HRA will also be revised. Since July 1, the Dearness Allowance of the employees will be increased to 28%, which requires for a revision in the HRA as well.