New Delhi: In a festive boost for over one crore central government employees and pensioners, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 3 percent increase in Dearness Allowance (DA). Announced on October 16, the hike raises the DA from 50 percent to 53 percent of basic pay, offering financial relief just ahead of the Diwali season.
The increase, which takes effect from July 1, 2024, means that employees and pensioners will receive arrears for July, August, and September. For an entry-level government employee with a basic salary of Rs 18,000, this translates to an additional Rs 540 in monthly pay.
The decision, which has been announced by Information and Broadcasting Minister Ashwini Vaishnaw, will benefit nearly one crore individuals, providing timely relief as inflation continues to strain household budgets. Vaishnaw also emphasised that the DA and Minimum Support Price (MSP) hikes are unrelated to the upcoming state elections.
While DA benefits salaried employees, dearness relief is intended for pensioners, helping to shield them from rising living costs. The DA adjustment is tied to the All India Consumer Price Index (AICPI), which tracks retail price changes to align salaries with inflation.
The announcement had been eagerly awaited, following reports of a possible increase discussed in a Cabinet meeting the previous week. On September 30, the Confederation of Central Government Employees and Workers expressed concerns about the delay, urging timely action in a letter to Finance Minister Nirmala Sitharaman. The confederation highlighted the importance of the DA hike and performance-linked bonuses ahead of the Durga Puja festivities.
Economists have welcomed the move, noting its positive impact on household spending during the festive season. "This will increase liquidity in the hands of government employees, which may boost spending on durable goods," said Sri Hari Nayudu, an economist with the National Institute of Public Finance and Policy (NIPFP).
Lekha S. Chakraborty, also a professor at NIPFP, added, "The DA hike offers short-term relief by increasing disposable income, providing a welcome fiscal response to inflationary pressures." However, she cautioned that it provides only temporary respite amidst mounting inflation.
The DA hike is expected to offer much-needed financial support to employees and pensioners, easing inflation's burden during the festive season.
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