india

Updated: Mar 13, 2020 17:08 IST

Highlights DA hiked by 4%

DA now stands at 21%

48 lakh employees and 65 lakh pensioners to benefit

Government of India on Friday announced a hike of 4% in Dearness Allowance commonly known as DA raising it to 21% from the existing 17% for 48 lakh central government employees and 65 lakh pensioners.

The hike cleared in the cabinet meeting on Friday will be effective from January 1, 2020, said Union minister Prakash Javadekar.

The hike is likely to benefit 1 crore 13 lakh families and will put an additional burden of Rs 14, 595 crores on the exchequer, the minister said.

“This is the second such step taken by this government to benefit central government employees. 7th pay commission recommendations were implemented in 2016,” Javadekar said.

The announcement is in keeping with junior finance minister Anurag Thakur’s recent statement in Parliament confirming the pendency of the DA that had become due from January.

Dearness Allowance is linked to inflation and an increase in the prices of essential commodities. The rate of inflation considered for DA calculation is based on the All India Consumer Price Index for industrial workers issued by the labour bureau in Himachal Pradesh.

DA is a component of salary which is calculated as a specific percentage of the basic salary earned by an employee. Since the impact of inflation varies from location to location, dearness allowance, too, takes that into account in its calculation. The DA, therefore, varies for employees posted in the urban, semi-urban and rural areas.

The DA is calculated twice every year – in January and July.

According to the income tax of India’s website, the formula for DA’s calculation was changed last in 2006.

With the hike in the DA, the pension for retired government employees will also be revised.