As of January 1, 2022, a proposal has been approved to increase the dearness allowance for government employees and pensioners by 3 per cent to 34 per cent of the basic pay from 31 per cent previously.
According to the 7th central pay commission recommendations, this increase in DA is based on the accepted formula.
Prime Minister Narendra Modi has approved the release of an additional instalment of dearness allowances (DA) to government employees and pensioners, effective January 1.
In order to compensate for the rising prices, that would be a 3 per cent increase over the existing rate of 31 per cent of the basic pay/pension.
Two straight months this year have seen retail inflation exceed the Reserve Bank of India's target range of 2-6 per cent.
Since those inflation figures do not yet include the rise in crude prices caused by the war between Russia and Ukraine, economists believe those prices may rise even further.
According to the cabinet notification, the term "basic pay" means the pay drawn pursuant to the 7th pay commission matrix and does not refer to any other type of pay.
It is estimated that the combined impact of the dearness allowance and the dearness relief on the exchequer will be Rs.9,544.50 crore per year.
A total of 47.68 lakh central government employees and 68.62 lakh pensioners will be benefited.
Employees in the civilian and defense sectors will be covered.
In the same manner, the dearness allowance was increased by 3 percent to 31 percent last year, effective July 1, 2021.