The government on Friday decided to increase the dearness allowance (DA) to Central government employees to 28 per cent, an increase of 11 per cent over the existing rate of 17 per cent of the basic pay. The same would also be available to pensioners in the form of dearness relief. The new rates for dearness allowance and dearness relief would be applicable from July 1. The decision was taken during the meeting of the Cabinet Committee chaired by Prime Minister Narendra Modi.

The government had frozen all such hikes due to the strain on its revenues in light of the Covid-19 crisis. The instalments due from January 1, 2020, July 1, 2020, and January 1, 2021, had also been frozen.

In a statement after the cabinet meeting, the government said: “Because of the unprecedented situation which arose due to the Covid-19 pandemic, three additional instalments of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, which were due from January 1, 2020, July 1, 2020, and January 1, 2021, had been frozen. Now, the Government has decided to increase the Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from July 1,2021 to 28 per cent.”

This step comes as a huge relief for government employees, especially with rising inflation. The government added that the increase reflects the additional instalments that were earlier frozen. “The rate of Dearness Allowance/Dearness Relief for the period January 1, 2020, to June 30, 2021, shall remain at 17 per cent,” it said.

After the cabinet meeting, Information and Broadcasting Minister Anurag Thakur said that the increase in the DA and DR will incur an additional annual burden of Rs 34,401 crore on the government exchequer. The move is expected to benefit about 48.34 lakh central employees and 65.26 lakh pensioners.

Amid the pandemic and the ensuing lockdowns in April last year, the Finance Ministry had decided to put on hold increments in DA for over 48 lakh central government employees and over 60 lakh pensioners till July 2021.

“Given the crisis arising out of Covid-19, it has been decided that additional instalment of dearness allowance payable to central government employees and dearness relief (DR) to central government pensioners due from January 1, 2020, shall not be paid. The additional instalment of DA and DR due from July 1, 2020, and January 1, 2021, shall also not be paid," the Department of Expenditure had said at that time.