New Delhi, Oct 09: The decision to hike the Dearness Allowance by 5 per cent as per the 7th Pay Commission will annually cost the government Rs 16,000 crore.
The announcement was made by union minister, Prakash Javadekar, following the Cabinet Meeting that was held a while ago. With this the DA has been increased to 17 per cent.
The government said that the combined impact on the exchequer on account of both Dearness Allowance (paid to employees) and Dearness Relief (to pensioners) would be Rs 15,909.35 crore per annum and the Rs 10,606.2 crore for the remaining part of the current financial year. This move would benefit 49.93 lakh CG employees and 65.26 lakh pensioners.
The additional financial implications due to this account in DA is estimated at 8,590.2 crore per year and Rs 5,720.80 crore in the current fiscal year of 2019-20. In the case of the Dearness Relief it is 7,319.15 crore per annum and Rs 4,870 crore in the current fiscal. The DA and relief is revised twice a year and comes into effect from January 1 and July 1.
A decision for the Central Government employees on the Dearness Allowance hike was expected to be made in August. However, the latest news on the DA hike was deferred.
The government was expected to take a decision on the 5 per cent DA hike on September 4. What CG employees must bear in mind is that the Dearness Allowance has been by increased by 5 per cent.
Harishankar Tiwari, Former Secretary and Assistant Secretary of All India Audit and Accounts Association, AG Office Brotherhood had said an increase in the DA is possible.
Tiwari who also calculates the government employees' DA had said that there is a possibility that the DA may be increased by 5 per cent. There is a tangible reason behind it and that is because, according to the Consumer Price Index (CPI) data, inflation has increased in April, 2019. However, there is a little uncertainty as CPI statistics for June, 2019 are yet to come and this will be revealed by the end of July, the report also said.
The DA now stands at 17 per cent and this would be the highest DA increment since 2016. It may be recalled that the government had hiked the DA by 3 per cent in January 2019. At that time the AICPI stood at 301 and the DA at 10.36 per cent. If the index increases by 2 points then the DA calculation will be based on 17 per cent.
CG employees have been demanding that their basic minimum pay be increased to Rs 26,000. The 7th Pay Commission had however recommenced that the basic minimum pay be at Rs 18,000.