The government on Tuesday approved the release of additional 1 % Dearness Allowance (DA) to its employees and Dearness Relief (DR) to its pensioners under the 7th Pay Commission. It allowed the hiking of both allowances to 5 % from 4%. The additional 1 per cent DA and DR, will be applicable from 1 July, 2017. This will benefit over 49.26 lakh central government employees and 61.17 lakh pensioners.
“The release of the additional instalment of DA represents an increase of 1 per cent over the existing rate of 4 percent of the Basic Pay/Pension, to compensate for price rise. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” read the government statement.
The government added that under the 7th pay commission, the release of additional 1 per cent DA and DR, will cost the exchequer on account of Rs.3068.26 crore per annum and Rs.2045.50 crore in the financial year 2017-18 (for a period of 8 months from July 2017 to February 2018).
On 28 June 2016, the Union Cabinet approved the recommendations of the 7th Pay Commission on pay hike and allowances. The Commission had recommended a 14.27 % hike in basic pay. The 7th Pay Commission had raised the minimum pay from Rs 7,000 to Rs 18,000 per month while the maximum pay has been hiked from Rs 80,000 to Rs 2.25 lakh per month and Rs 2.5 lakh for the cabinet secretary—the senior-most civil servant.