It’s good news for central government employees as the Union Cabinet on Wednesday approved an additional 2% hike in their Dearness Allowance (DA). The hike will come into effect from July 1st, 2018.

Besides, an additional installment of Dearness Relief (DR) for pensioners was approved by the Cabinet chaired by Prime Minister Narendra Modi. The 2% hike in DA is in addition to the existing rate of 7% of the Basic Pay or Pension, to compensate for the price rise.

An estimated cost of Rs. 6,112.20 crore per annum and Rs. 4,074.80 crore in the financial year 2018-19 is expected on account for both Dearness Allowance and Dearness Relief, an official statement says. For the current year, the 8-month period from July 2018 to February 2019 will be taken in to account.

Interestingly, the government had earlier, in January 2018, increased the DA for its 11 million employees and pensioners to 7%, from the then rate of 5%. So the current 2% hike in DA is a second such increase in one year.

However, the hike in DA is in line with the recommendations of the 7th Central Pay Commission. This Cabinet decision will benefit about 48.41 lakh staff currently employed with the Central government and 62.03 lakh pensioners.