The Union Cabinet has approved a 3 per cent hike in Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, a move that will benefit more than one crore central government employees and pensioners. The hike will be effective from January 1, 2019. The move is to cost the Government Rs. 9168 crore.
The Union Cabinet had previously increased dearness allowance from 7 per cent to 9 per cent with effect from July 2018.
The DA is a cost of living adjustment allowance paid to government employees and pensioners. It is a component of salary and is counted as a fixed percentage of the person's basic salary. It is adjusted according to the inflationary trends to lessen the impact of inflation on government employees. The DA hike is calculated based on the Consumer Price Index Numbers for Industrial Workers (CPI-IW) released by the Labour Bureau, Government of India.