The Union Cabinet have approved the grant of 7 per cent additional Dearness Allowance (DA) to Central Government employees. It also approved Dearness Relief (DR) for pensioners. Both DA and DR will become effective from July 1, 2014. With this the DA and DR will be at 107%
This is an increase of 7 per cent over the existing rate of 100 percent of the Basic Pay/Pension to compensate for price rise, said an official release issued on Thursday.
The increase is in accordance with an accepted formula based on the recommendations of the 6th Central Pay Commission.
The combined impact on the exchequer in the financial year 2014-2015 (for eight-months period starting July 2014 till February 2015) on account of the DA would be of the order of approximately Rs. 7,691 crore per annum and that of the DR would be Rs. 5,127 crore.
A central government workers’ union said the hike wasn’t enough to cover food inflation and erosion in the real value of wages. Food inflation as measured by the Consumer Price Index in July was 9.36% against 8.05% in June, as per government data. “I think they have taken an average of the inflation over the last one year while deciding this, but it will not compensate the entire price thing. The real value erosion of wages has happened by nearly 210%, but government is giving 107% DA. It means government is not compensating the erosion of real value of wage by another 100%,” said K.K.N. Kutty, president of the Confederation of Central Government Employees and Workers. “We have given our memorandum to the government and even to the 7th Pay Commission to add DA to the basic pay, and are hopeful that it may be taken up soon.”