The Union Cabinet has sanctioned a 4% increase in dearness allowance (DA) for central government employees, bringing the total to 50%. This decision, based on the Consumer Price Index (CPI) data for industrial workers, aims to benefit 50 lakh employees and 68 lakh pensioners.
Impact on Central Government Employees and Pensioners
The 4% hike in dearness allowance, approved by the Union Cabinet, will cost the government Rs 12,868 crore. Additionally, due to the rise in DA, additional benefits for House Rent Allowance have been authorized. The calculation follows a specific formula based on the 7th Pay Commission’s recommendations, ensuring that all central government employees and pensioners receive adjustments in their salaries to counter the impact of inflation.
Increase In Education Allowance
As per the 7th Pay Commission, for every 50% increase in dearness allowance (DA), children’s education allowance will rise by 25%. For instance, if a central government employee receives Rs 2,250 monthly for children’s education allowance, it will increase to Rs 2,812.5 when DA reaches 50%.
Increase In Gratuity, Dress Allowance
When the dearness allowance (DA) hike reaches 50%, various other components of salaries will also increase by 25%. These include special allowances for childcare, the ceiling for gratuity, dress allowances, and daily allowances. However, the extent of these increments will vary depending on the specific components of the salary structure and the individual’s pay level. It’s important to note that these adjustments aim to align the allowances with the increased cost of living, ensuring that employees receive adequate compensation in line with inflation.
