As per an order issued by the Department of Expenditure on July 7, 2017, an increase in Dearness Allowance (DA) over 25% will have to be followed by a HRA (Housing Rent Allowance) hike/revision.
As the central government has increased the DA of over 1 crore government employees and pensioners to 28% since July 1, 2021, it is yet to pay them the pending DA installments for over a year and a half.
Under the 7th pay commission, the central government has hiked the dearness allowance, dearness relief and house rent allowance for its employees. Now, prior to Diwali, the government could give double bonus to its employees.
This means that prior to Diwali, the central government could pay all of its employees the pending DA of over 90 months with revised rate and an increased HRA, due to hiked DA.
Government Could Give Double-Bonus Before Diwali
In March 2020, the Minister of State for Finance Anurag Thakur announced a hike/revision of 4% in the Dearness Allowance received by central govt employees and pensioners, under the recommendations of the 7th Pay Commission, which was to come under effect from January 1, 2021.
This meant over 50 lakh central government employees and 61 lakh pensioners would receive a hiked DA of 21% from 17%, starting Jan 1, 2021.
However, due to the advent of the ongoing coronavirus pandemic in 2020, the government decided on freezing the DA hike as well as the installments for its employees.
At present, the existing DA is 28%, hiked from 21% and will be applicable from July 2021.
Central government employees have been waiting for their Dearness Allowance for almost a year and a half. The Finance ministry had commented that the three pending DA instalments for all the 1.13 crore recipients will be restored all at once in the revised rates, effective from July 1, 2021.
The three instalments of DA and Dearness Relief to central government employees and pensioners are due from 1.1.2020, 1.7.2020 and 1.1.2021.
However, it is being anticipated that the central government could give a ‘double bonus’ to its employees before Diwali.
HRA to be Hiked Due to Increase in DA
According to an order issued in 2017, if the dearness allowance increases above 25%, then the HRA offered to central government employees must also be revised.
As DA is 28% at present, the government has decided to increase the HRA to 27%. Additionally, central government employees are awarded different rates of HRA depending upon their city of residence.
These employees are provided HRA benefits of 27%, 18% and 9%, based upon different classes of cities, segregated as X, Y and Z class cities.
Central employees in X category cities will be awarded an HRA hike of over Rs 5,400 per month, while those in Y and Z category cities will be given a hike of Rs 3,600 and Rs 1,800 per month.
This means that if the hiked DA is clubbed with the hiked HRA on existing basic pay salary, the monthly salary of central employees will be increased by Rs 1,980 on an average.
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