HomeWhat's TrendingUnion Cabinet Approves 4% Raise in Dearness Allowance For Employees

Union Cabinet Approves 4% Raise in Dearness Allowance For Employees

The Union Cabinet approved a 4% raise in Dearness Allowance for Central government employees and pensioners. Thereafter, there will be increases to other benefits as well, such as the canteen, deputation, and house rent allowances.

During the meeting held in New Delhi on 7 March 2024 the Union Cabinet resolved to provide Central government employees with an additional instalment of Dearness Allowance (DA) and to provide pensioners with Dearness Relief (DR) starting on 1 January 2024. According to the administration, the 4% raise in dearness allowance will be higher than the current rate of 46% of basic salary and pension to offset price increases. There will be following increases to other allowances as well, such as the canteen, deputation, and dwelling rent allowances.

Following the discussion, Union Minister Piyush Goyal told reporters that the combined annual impact of both DR and DA will be ₹12,868.72 crore on the exchequer. ‘Approximately 49.18 lakh Central government employees and 67.95 lakh pensioners will benefit from this,’  he stated.

Mr. Goyal claims that the increase is based on the recommendations of the seventh Central Pay Commission and adheres to the established approach. Major government employee unions have decided to demand the return of the old pension plan by going on an indefinite strike ahead of the general election. In addition, laborers had planned demonstrations to demand that the Center address differences in salaries, benefits, and promotions.

The Center plans to pay an additional ₹15,014 crore in DA during this fiscal year. Mr. Goyal also mentioned a 25% rise in the allowances for transportation, canteening, and deputations. The percentage of basic salary allocated to house rent allowance has been increased from 27%, 19%, and 9% to 30%, 20%, and 10%, correspondingly. Additionally, benefits under gratuity would increase by 25%, with a new cap of ₹25 lakh instead of the current ₹20 lakh. The Center could need to set aside ₹9,400 crore a year for this.

The government’s decision to increase the Dearness Allowance and other benefits is applaudable, particularly in light of the rising cost of living. A prominent economist said, ‘It will give government workers and pensioners much-needed relief, helping them cope with the rising cost of living.’

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Akash G Varadaraj