Dearness Allowance (DA) hiked for Union Government Employees

The Union government on 24 September 2012,  hiked Dearness Allowance (DA) by 7%, benefiting its 80 lakh employees and pensioners and costing the exchequer an additional Rs7,408 crore annually. With the dearness allowance the pension proposals for personnel of armed forces is also allowed now.

The hike in the DA from 65% to 72% will cost the exchequer Rs4939 crore for the remaining part of the current financial year. The annual burden on account of the DA increase is estimated at Rs7408 crore.

It is going to benefit about 50 lakh employees and 30 lakh pensioners of the
central government. The decision was made by the government to compensate its employees and pensioners for general price rise.
The increase in DA is in accordance with the accepted formula which is based on the recommendations of the 6th Central Pay Commission.

The government had increased DA in March this year from 58% to 65%, which was effective from January 1; 2012.The government periodically hikes the DA, which is linked to consumer price index for industrial workers.

Dearness allowance (DA) is calculated as a percentage of an Indian person's basic salary and was introduced to alleviate against the impact of inflation upon low income earners.

Both pensioners and their families are granted DA and this continues following reemployment with the Central or State Government, a Government undertaking, an autonomous body or a local body.