The Cabinet on Wednesday announced a 2% increase in dearness allowance to Central government employees and pensioners. The government said the increase to the existing 7% rate of the basic pay or pension was to factor in the price rise.
The development will be considered effective from July 2018. The government said the increase will cost it Rs 6,112.20 crore per year and Rs 4,074.80 crore in the financial year 2018-’19 (for a period of eight months from July 2018 to February 2019).
The move will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners. “This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” the statement said.
In March, the government had announced a 2% increase to the 5% dearness allowance and relief offered to employees and pensioners at the time.