Dearness Allowance (DA) hike for Central Government Employees

Central government employees received an early Diwali bonanza on Thursday, with the Cabinet granting them a dearness allowance ( DA) hike of 10 per cent effective July 1.The dearness relief (DR) admissible to pensioners also went up by the same amount.

Both the allowances would now be calculated at 45 per cent of the basic pay or pension. The bonanza comes a day after the interest rate on employees’ provident fund was increased from 8.5 to 9 per cent.

An official release said the decision to hike the DA and the DR would put an additional burden of Rs 9,303.2 crore on the exchequer, while it would cost an extra Rs 6,202.1 crore during the fiscal 2010- 11.

The DA hike, announced in accordance with the formula devised by the sixth pay commission, factors into the rise in prices. The base year for the wholesale price index (WPI) was shifted to 2004- 05 from 1993- 94, and the index now includes 241 new items for determining it.

Inflation stood at 8.5 per cent in August, while food inflation is hovering above 15 per cent, according to the new WPI indices.

The employees, however, said the increase in the DA was meagre. “ We are not satisfied,” KKN Kutty, secretary general of the Confederation of Central Government Employees, said.

He said the retail inflation has gone up by 174 per cent during the period from January 1, 2006, to June 30 this year, but the Centre is giving just 45 per cent dearness allowance.

The increase in DA is in accordance with the formula based on the recommendations of the Sixth Pay Commission. The existing rate of the DA is 35 per cent.