The Union Cabinet approved a 3 percent dearness allowance (DA) as well as dearness relief (DR) hike for the central government employees and pensioners on Thursday.

The increase of 3 per cent is over the existing rate of 28 per cent of the basic pay/pension. This move will benefit about 47.14 lakh Central government employees and 68.62 lakh pensioners. It will cost the exchequer Rs 9,488.70 crore per annum.

India Today TV has reported earlier in the day that the Cabinet is likely to hike DA and DR for central government employees and pensioners.

The DA and DR hike was approved by the Union Cabinet after a meeting was held earlier in the day. It is a welcome development for central government employees and pensioners.

In July 2021, the government has finally approved pending DA and DR hikes for central government employees and pensioners after almost a year.

It may also be noted that the government temporarily halted dearness allowance and dearness relief benefits for central government employees and pensioners in 2020 due to a shortfall in revenue collection after the Covid-19 pandemic devastated the Indian economy.

The resumption of DA and DR hikes in July benefitted lakhs of central government employees and pensioners.

The decision came into effect from July 1, 2021, following which the DA and DR increased to 28 per cent from 17 per cent. The government indicated that the move to restore the DA and DR hikes would cost Rs 34,400 crore.