The Union Cabinet on Tuesday approved a 1% increase in Dearness Allowance for Central government employees. It also cleared a Bill to raise the gratuity ceiling for private sector employees.
The Cabinet said that the DA and gratuity had been increased because of the increase in inflation and wages in the private sector. The government increased the Dearness Allowance and Dearness Relief to 5% from 4%, which will benefit 49.26 lakh Central government employees and 61.17 lakh pensioners, said a statement from the Cabinet.
The approvals were made when Prime Minister Narendra Modi chaired his first Cabinet meeting after the expansion of the council of ministers. “Gratuity adjustment was long due and this will handle the inflation increase but the increase in DA is not likely to boost the economy,” DK Joshi, chief economist at rating agency Crisil said.