The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved to release an additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from July 1, 2019 representing an increase of five per cent over the existing rate of 12 per cent of the basic pay or pension, to compensate for price rise.
Information and Broadcasting Minister Prakash Javadekar while briefing media on the Cabinet decisions here said, ‘This increase is in accordance with the accepted formula, which is based on the recommendations of the seventh Central Pay Commission.’
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 15,909.35 crore per annum and Rs 10,606.20 crore in the financial year 2019-20 for a period of eight months from July, 2019 to February, 2020.
‘This will benefit about 49.93 lakh Central government employees and 65.26 lakh pensioners,’ he added. The additional financial implication on account of this increase in Dearness Allowance is estimated at
Rs 8,590.20 crore per year; and Rs 5,726.80 crore in the current Financial Year of 2019-20 (for eight months from July 2019 to February 2020). The additional financial implication on account of the Dearness Relief to pensioners is estimated to be Rs 7,319.15 crore per annum and Rs 4,870 crore in the current FY.
Dearness Allowance or Dearness Relief is paid to Central government employees or pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value.
It is revised twice a year from January 1 and July 1.