5% additional Dearness Allowance approved

Additional installment of Dearness Allowance and Dearness Relief was approved by the Union Cabinet on October 9, 2019. According to the approval, the central government employees are provided with a increase of 5%. Currently it is 12% of the basic pay. Similarly, the Dearness Relief to the pensioners was increased to 5% while its current rate is 12% of the pension.

The increase is being done to compensate the price rise. The increase is based on the recommendations 7th Pay commission

Analysis

The RBI recently has been cutting off the repo rate. It now stands at 5.15% in the last bi – monthly policy review. With this, the inflation is predicted to increase. The increase of the allowances by the cabinet is a precautionary step. The current inflation is around 3% which lies within the boundaries of target inflation set by RBI.

The DA and DR paid to the Central Government employees and pensioners are to adjust the cost of living and to protect their basic pay. Generally, it is revised twice a year.

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