There is good news for 48.41 lakh Central Government employees and 62.03 lakh pensioners, as the Union Cabinet on Wednesday approved two per cent increase in the dearness allowance (DA). The hike will be implemented with retrospective effect from July. The increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. Also Read - 7th Pay Commission Latest News: Will Central Govt Employees Get Pending Dearness Allowance From July 1? Check Latest Updates Here

The Union Cabinet increased the allowance from 5 per cent to 7 per cent in March. Now the central government employees will get 9 per cent dearness allowance against the earlier limit of 7 per cent. Also Read - 7th Pay Commission Latest News: Will Central Govt Employee Get Travel Allowance Hike in July? Here’s An Update

The combined impact on the exchequer on account of both Dearness Allowance and Deamess Relief would be Rs 6112.20 crore per annum and Rs 4074.80 crore in the financial year 2018-19 (for a period of 08 months from July, 2018 to February, 2019). Also Read - 7th Pay Commission Latest News: Centre, States Have Big Holi Benefits For Govt Employees | Check Details Here

Dearness allowance is paid to take into account the impact of inflation which increases the cost of living. The allowance is paid to government employees including pensioners so that they adjust their expenditure in line with the inflation rate. With an increase in dearness allowance, the impact of inflation gets cushioned on government employees.

The press release by the government states, “The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2018 representing an increase of 2 per cent over the existing rate of 7 per cent of the Basic Pay/Pension, to compensate for price rise.”