5% hike in DA for central government employees will be effective from July 2019
The government on Wednesday announced a hike of 5 percentage points in the dearness allowance paid to central government employees
In Short
- 5 per cent point increase in DA is highest ever hike: Govt
- The hiked DA will be effective from July 2019
- In January, the government had hiked DA to 12 per cent
The government on Wednesday hiked the dearness allowance (DA) by five percentage points for central government employees in a "Diwali gift" that will cost the Centre around Rs 16,000 crore every year. With the hike, central government employees and pensioners will be paid 17 per cent of their basic salary as DA.
Dearness allowance is a component of salary paid to individuals to compensate for inflation. For central government employees, the DA is revised twice annually -- in January and July.
The hiked DA for central government employees will impact around 50 lakh serving personnel and 65 lakh pensioners. The new DA will be effective from July 2019.
The announcement of a hike in DA for central government employees was made by Union minister Prakash Javadekar in New Delhi where he briefed the press on decisions taken by the Union Cabinet. "This is the highest ever 5 percentage points increase in DA in one go by the central government," Javadekar who termed the hike in DA a Diwali gift.
DA for government employees increased by 5 %.
Around 50 lakh central government employees and 62 lakh pensioners to be benefited: Union Minister @PrakashJavdekar pic.twitter.com/W8BdKkdpGw PIB India (@PIB_India) October 9, 2019
This is the second time the government has increased dearness allowance central employees this year. Earlier in January, the government increased DA to 12 per cent from the 9 per cent earlier.
The increase in DA will cost the government Rs 15,909.35 crore per year. For 2019-20, the government will spend Rs 10,606.20 crore on revised salaries starting from July 2019. The increased DA will benefit around 49.93 lakh central government employees and 65.26 lakh pensioners.
The windfall increase in dearness allowance is likely to be seen in some quarters as a silent push by the Modi government to boost the economy, which is in the grips of a slowdown.
While the government has announced a series of measures to increase credit and thus boost production, it has been criticised for not doing enough to encourage buying. The hike in salaries for government employees could be seen as a push to increase spending power and thus boost demand in the market.