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In a huge relief for central government employees and pensioners, union minister Anurag Singh Thakur on Wednesday announced restoring three pending instalments of Dearness Allowance (DA) and Dearness Relief (DR) will effect from July 1, 2021.

“The DA for Central Government employees and pensioners has been increased from 17% to 28%, representing a hike of 11%. This will be applicable from 1st July 2021,” the union minister said during the cabinet briefing.

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The DA and DR hikes were frozen due to the Covid-induced economic slump last year. The freeze halted three instalments of January 2020, July 2020 and January 2021. With the latest move, the central employees have received benefit of three salary increments.

No Arrears

The move is expected to cost about Rs 34,400 crore to the exchequer. The decision will impact around 48,34,000 central government employees and 65,26,000 pensioners, Thakur said. The government has only announced restoration of the DA and DR as it is already battling an economic slump. The government has not announced releasing the DA arrears due in the given period. Payment of arrears will make a huge dent on government finances.

The Math behind DA

DA / DR is fixed as per the rate of inflation. The 7th Pay Commission has considered 2016 as the base year with the index of the base year at 261.4. The Labour Bureau releases the Consumer Price Index (CPI) and the 12-month consumer price index is averaged and subtracted from the base year index to arrive at DA.

DA = 12 Month Consumer Price Index Average -261.4 / 261.4 x 100

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