NEW DELHI: The Centre on Friday hiked dearness allowance (DA) for government employees by four percentage points to 42 per cent from the existing 38 per cent as per the agreed formula for the purpose.
The decision will benefit over one crore employees and pensioners.
“The combine impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 12,815.60 crore per annum,” the Union Cabinet said in a statement.
It said that the increase is in accordance with the accepted formular which is based on the recommendations of the 7th Central Pay Commission.
The dearness allowance for employees and pensioners are worked out on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month. The Labour Bureau is a wing of the labour ministry.
The DA hike will be effective from January 1, 2023.
Last revision in DA was done on September 28, 2022, which was effective from July 1, 2022.
The Centre had increased DA by four percentage points to 38 per cent based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June, 2022.
The DA is provided to employees and pensioners to compensate them for rising prices. The cost of living increases over a period of time and is reflected through CPI-IW.
The allowance is revised periodically twice a year.
(With inputs from PTI)