The central government has increased the dearness allowance of central employees by 3% ahead of Diwali and Dussehra. This increase will take effect from July 1st. Employees will receive three months’ arrears. This decision was taken in a cabinet meeting chaired by PM Modi on Wednesday. The dearness allowance will now increase from 55% to 58%. This will benefit 4.92 million central employees and 6.87 million pensioners. This will cost the central government treasury ₹10,084 crore. The dearness allowance was increased by 2% six months ago.
In March, the dearness allowance was increased by 2%. This was the lowest increase in seven years. Usually, the dearness allowance increase ranges between 3% and 4%, but at that time, the increase was only 2%. DA is given to combat inflation.
Dearness allowance (DA) is given to maintain the standard of living of government employees and pensioners despite rising inflation. DA rates are determined based on the All India Consumer Price Index (AICPI), and it is updated every six months. What is the All India Consumer Price Index?
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