The Centre on Wednesday issued the formal notification for enhancing the Dearness Allowance for its 88 lakh employees and pensioners by 10 percentage points, a measure intended to bring smiles to faces in the run up to the festive season.
This comes as a follow up to the approval given last week by the union Cabinet to hike the DA from 35 per cent to 45 per cent of the basic salary of the central government employees with retrospective effect from July 1, 2010.
“… the President is pleased to decide that the Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 35 per cent to 45 per cent with effect from July 1, 2010,” the Department of Expenditure said in an office memorandum.
The new order will also be applicable civilian employees paid from the Defence Services Estimates. However, separate orders will be issued for armed forces personnel and railway employees.
The increase in DA comes just a few days after the organised workforce was cheered by one percentage point increase in the interest rate on the provident fund to 9.5 per cent.
The hike in DA will mean an additional burden of Rs 9,303.2 crore per annum for the exchequer. During the remainder of the current fiscal, the burden is estimated at Rs 6,202.1 crore.
The pay hike, ahead of Diwali and Durga Puja — ranging from Rs 584 and Rs 8,000 per month, would provide relief to the employees and pensioners from the price rise. The minimum basic salary among the employees is Rs 5,840 and the maximum Rs 80,000 per month.
The inflation, according to the Consumer Price Index (CPI) for industrial workers (the basis for DA calculation), was 11.25 per cent for July.
Inflation stood at 8.5 per cent in August, while food inflation is hovering above 15 per cent, according to the new WPI indices.
The existing rate of DA, which is paid as percentage of basic pay to compensate employees for the rising cost of living, is 35 per cent.
Besides, 50 lakh serving employees in the central government, there are 38 lakh pensioners.
Resource by ET