Finally, cabinet approves Dearness Allowance (DA) hike from July 2023

In a much-awaited development, the Union Cabinet has approved a 4% increase in the dearness allowance (DA) for central government employees. Union Minister Anurag Thakur said the centre will spend ₹ 12,815 crore to fund the hike in dearness allowance, or DA.

Read the Finance Ministry Office Memorandum hiking the Dearness Allowance from 42% to 46% with effect from July 1, 2023

"... This will benefit about 47.58 lakh central government employees and 69.76 lakh pensioners. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission," the government said in a statement.

This hike comes as a relief to the dedicated workforce of the central government and pensioners, who have been eagerly awaiting a DA hike since July. With this increase, the dearness allowance will rise from 42% to 46%, providing a significant boost to the income of millions of government employees.

This announcement comes just one day after the government's declaration of Non-Productivity Linked Bonus for the year 2022-23 for Group C and non-gazetted Group B level officials, which also includes paramilitary forces. These combined efforts aim to bring cheer and financial relief to the central government employees just ahead of the festive season, as the nation gears up to celebrate Dussehra and Vijaya Dashami.

Traditionally, the DA due from July is disbursed before the festivals of Dussehra or Vijaya Dashami to enhance employee morale and foster goodwill. However, this year's announcement carries an additional economic significance, as it is expected to contribute to an increase in consumer spending during the festive season, thus further stimulating the economy.

In addition to the much-anticipated DA hike, central government employees have been keenly awaiting the formation of the 8th Pay Commission. The 7th Pay Commission, which was constituted in 2014, saw its recommendations being implemented in 2016. Since then, the cost of living has witnessed a significant uptick, and central government employees have consistently voiced their demands for a revision of their pay scales to align with the current economic conditions.

The decision to increase the DA will have a positive impact on the financial stability and well-being of central government employees and pensioners. It is shown as a gesture of recognition for their dedicated service, especially during the challenging times of the COVID-19 pandemic. As the nation prepares to celebrate the upcoming festivals, the government's decision is expected to bring smiles to the faces of these employees, allowing them to enjoy the festivities with increased enthusiasm and financial security. Moreover, the move is also expected to contribute to a boost in consumer spending, thereby benefiting the broader economy during the festive season.

Read the Finance Ministry Office Memorandum hiking the Dearness Allowance from 42% to 46% with effect from July 1, 2023