Centre Hikes DA, DR By 4% For Govt Employees, Pensioners

In a move aimed at providing relief to central government employees and pensioners ahead of the festive season and crucial assembly polls, the Indian government has announced a significant increase in the dearness allowance (DA) and dearness relief (DR). The new rates, set to come into effect from July 1, 2023, were revealed by Union Information and Broadcasting Minister Anurag Thakur following a cabinet meeting on Wednesday.

The decision, which was made during a cabinet meeting chaired by Prime Minister Narendra Modi, will see a four-percentage-point increase in the dearness allowance (DA) for approximately 4.86 million central government employees. Additionally, a similar increase in dearness relief (DR) will be extended to approximately 6.8 million pensioners.

This decision is expected to have a combined annual impact of ₹12,857 crore on the exchequer. Both employees and pensioners will receive the retroactive payment from July 1, 2023. The increase aligns with the recommendations of the 7th Central Pay Commission and is considered in accordance with the accepted formula, as per a report in Hindustan Times.

An official, speaking on the condition of anonymity, revealed that the decision was made in light of the upcoming three-month-long festive season, which includes Navratra, Diwali, Chhat Puja, Gurupurab, and Christmas.

Double Cheers Ahead of Elections

Experts have noted that this move is likely to be well-received by over 10 million families in India. Notably, it comes in the midst of preparations for assembly polls in five states: Mizoram, Chhattisgarh, Madhya Pradesh, Rajasthan, and Telangana, scheduled to begin on November 7.

This decision follows a period of cooling inflation rates, with retail inflation easing significantly in September. However, experts have cautioned that the volatile geopolitical situation in the Middle East could once again drive up global food and fuel prices, adversely impacting India. India, which imports 87% of the crude oil it processes, remains susceptible to global oil price fluctuations.

The Consumer Price Index (CPI) had surged to a 15-month high of 7.44% in July, driven by elevated food inflation. It subsequently eased to 5.02% in September, falling below the Reserve Bank of India's (RBI) upper tolerance band of 6%.

The dearness allowance (DA) is an allowance paid to central government employees to account for the cost of living and protect their basic pay from erosion due to inflation. The allowance is currently based on the consumer price index-industrial workers (CPI-IW).

Central Pay Commissions are periodically formed to address various aspects of emolument structure, retirement benefits, and service conditions of central government employees, and to provide recommendations for necessary changes.

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