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The government on Tuesday notified the increased the rate of dearness allowance (DA) and dearness relief (DR) after a gap of one-and-half years from 17% to 28%, benefiting nearly 1.14 crore employees and pensioners.

The new rates of DA and DR, which will impose an annual burden of Rs 34,401 crore on the exchequer, will come into effect from July 2021. The decision on the DA and DR was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi.

In view of the pandemic, the Centre had frozen the three additional instalments of the DA and DR which were due from January 1, 2020, July 1, 2020 and January 1, 2021. There will be no payment of arrears this time, as the rate of DA/DR for the period from January 1, 2020 to June 30, 2021 shall remain at 17% of basic pay/pension. The enhanced rate of DA and DR will be paid from July 2021.

The increase reflects the additional instalments arising on January 1, 2020, July 1, 2020 and January 1, 2021. The combined impact on the exchequer on account of both DA and DR would be of the order of Rs 34,401.84 crore per annum.

The rate of DA/DR for the period from January 1, 2020 to June 30, 2021 shall remain at 17%.