Cabinet Approves 4% DA Hike; Outgo at ₹12,900 Cr

The Union Cabinet on Thursday approved an additional instalment of 4% dearness allowance (DA) and dearness relief (DR) for central government employees and pensioners effective from January 1, 2024. This decision will benefit over 10 million employees and 6.79 million pensioners, with a combined impact on the exchequer of Rs 12,869 crore per annum.

The hike in DA and DR is in accordance with the accepted formula, and is based on the recommendations of the 7th Central Pay Commission. The increase is determined by the Consumer Price Index (CPI) data for industrial workers, which stands at 392.83 for the last 12 months.

The increase in DA and DR will also result in additional benefits for various allowances such as house rent allowance (HRA), transport allowance, canteen allowance, deputation allowance and gratuity. The HRA has been raised to 30%, 20% and 10% of basic pay, respectively, from 27%, 19% and 9%, respectively. The benefits under gratuity have been increased by 25% with an increased ceiling of Rs 25 lakh against the existing Rs 20 lakh.

The government said that the decision is aimed at mitigating the impact of inflation on the income of central government employees and pensioners.

Here are some more details about the DA hike:

• The DA hike will be effective from January 1, 2024, but the arrears will be paid from July 1, 2024.
• The DA hike will benefit about 50 lakh central government employees and about 68 lakh pensioners.
• The DA hike will cost the government Rs 12,868.72 crore per annum and Rs 15,014.32 crore during the year 2024-25 (January 2024 to February 2025).
• The DA hike will also increase the minimum wage of central government employees from Rs 18,000 to Rs 18,720 per month.
• The DA hike will also enhance the purchasing power of central government employees and pensioners and boost the economy.

Recent Blog : Spectrum Auction to Kick Off on May 20