Govt hikes DA after to 28% effective July 1

The government has increased the rate of Dearness Allowance (DA) and Dearness Relief (DR) after a gap of one-and-half years from 17 per cent to 28 per cent, benefiting nearly 1.14 crore employees and pensioners.

The new rates of DA and DR, which will impose an annual burden of Rs 34,401 crore on the exchequer, will come into effect from July 2021, said Information and Broadcasting Minister Anurag Thakur while briefing reporters about the meeting of the Union Cabinet.

The decision on the DA and DR was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi.

In view of the COVID-19 pandemic, the Union Government had frozen the three additional instalments of the DA and DR which were due from January 1, 2020, July 1, 2020 and January 1, 2021.

There will be no payment of arrears this time, as the rate of DA/DR for the period from January 1, 2020 to June 30, 2021 shall remain at 17 per cent of basic pay/pension.

The enhanced rate of DA and DR will be paid from July 2021.

"Cabinet approves restoring of three instalments of Dearness Allowance and Dearness Relief with effect from 01.07.2021 representing an increase of 11 per cent over the existing rate of 17 per cent of the Basic Pay/Pension.

"No arrears for the period from 01.01.2020 till 30.06.2021 shall be paid," said an official tweet.

The increase reflects the additional instalments arising on January 1, 2020, July 1, 2020 and January 1, 2021.

The move, Thakur said, will benefit about 48.34 lakh central employees and 65.26 lakh pensioners.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of the order of Rs 34,401.84 crore per annum and Rs 22,934.56 crore in the financial year 2021-22 (for a period of 08 months from July, 2021 to February, 2022), said sources.

The rate of DA/DR for the period from January 1, 2020 to June 30, 2021 shall remain at 17 per cent.