5% hike in DA for Central govt employees

New Delhi: Over eight million Central government employees and pensioners will get an additional five per cent Dearness Allowance (DA) that will hit the exchequer by over Rs 2,900 crore this fiscal and Rs 4,355 crore in a full year.

The decision to hike the Dearness Allowance for the employees and Dearness Relief for pensioners just before the festive season, taken at the Cabinet meeting on Thursday, will create additional demand and boost the economy which is being impacted by an erratic Monsoon.

The additional DA, to be given with effect from July 1 this year, will help these employees and retired people weather the impact of rising prices.

"The Cabinet has decided to release an additional installment of DA to central government employees and DA to pensioners...representing an increase of 5 per cent over the existing rate of 22 per cent of the basic pay, pension to compensate for price rise," Information and Broadcasting Minister Ambika Soni told reporters after the Cabinet meeting.

Even as the wholesale price inflation remains in negative zone for over three months in a row largely because of high inflation in a year-ago period, the rate of price rise based on retail prices of items consumed by industrial workers has crossed double digits, according to latest figures.