Centre okays 2% hike in DA for one crore staff, pensioners in boost for Diwali spending

The festive bonanza doesn’t seem to be ending for the lakhs of central government employees and pensioners this year. Providing yet another windfall just ahead of Diwali, the Cabinet on Thursday okayed 2 percent hike in dearness allowance (DA), which would benefit 50 lakh central government employees and 58 lakh pensioners in the country. The hike in DA will be with effect from 1 July, 2016. [caption id=“attachment_3033622” align=“alignleft” width=“380”]  Reuters[/caption] The latest hike is in addition to a 6 percent DA hike to 125 percent the cabinet announced earlier in the year. which was effective from 1 January. Dearness allowance and dearness relief is provided to employees and pensioners to neutralise the impact of price rise on their earnings. The DA was later merged into the basic pay following implementation of Seventh Pay Commission award. The central government employee unions want that the DA should be increased by 3 percent instead of 2 percent which the centre announced a short while ago. President of Confederation of Central Government Employees K K N Kutty said, “The 12-month average of Consumer Price Index for Industrial Workers from July 1, 2015 to June 30, 2016, works out to be 2.92 percent. Therefore the unions had pressed for 3 percent DA. We are not satisfied with this.” As per the agreed formula, government increases DA on the basis of 12-month average of the retail inflation and does not consider the price rise rate beyond decimal point for deciding the rate of dearness allowance. Already, the seventh pay commission bonanza has resulted in huge arrears being disbursed to government employees during the ongoing festive season. As much as Rs 70,000 crore has been provisioned in the Union Budget 2016-17 for implementation of Seventh Pay Commission for government employees, while implementation of the pay commission report in toto is to cost the government Rs 1.02 lakh crore. With agency inputs