11% Hike in DA of Central Government Employees

After a long wait, the Dearness Allowance of Central Government employees are hiked to 28% with increase of 11% over the existing rate of 17 percent of the basic pay/pension. The hike is approved by Union Cabinet on July 14 in Dearness Allowance (DA) and Dearness Relief (DR) given to central government employees with effect from July 1, 2021. 

This is the major relief to the lakhs of government employees and pensioners, which would enhance their spending ahead of the festive season. 

Three instalments of dearness allowance to central government employees and dearness relief to pensioners, which were due from January 1, 2020, July 1, 2020 and January 1, 2021 had been frozen due to pandemic.

Dearness allowance is paid by the government to its employees to compensate for the increase in the cost of living due to inflation. It is revised twice a year, on January 1 and July 1. Dearness relief is the same as allowance and is given to central government pensioners.

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In April last year, the finance ministry had put on hold an increment in DA for 50 lakh central government employees and 61 lakh pensioners till June 30, 2021, due to the COVID-19 pandemic even though the Cabinet had approved a hike in DA to 21 percent a month before. 

The existing rates of 17 percent DA/DR will continue to be paid till July 1, 2021. From that day onwards, the new rates of DA/DR will be restored ‘prospectively’. This means there will be no arrears paid for the difference between 21 percent and 17 percent that would have accumulated between January 1, 2020 and July 1, 2021. On June 27 this year, the Finance Ministry had clarified that no order regarding resumption of DA for the central government employees and DR for the central government pensioners from July 1 has been issued. 

The ministry said that a document claiming the same was being circulated on social media.