On the eve of Holi festival, union government on Wednesday hiked dearness allowance (DA) by 6 per cent, benefiting over 1 crore central government employees and pensioners.
The DA, which will benefit, 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 per cent to 125 per cent.
As per cabinet, hike will take effect from January 1, 2016 and cost the exchequer an additional Rs 14,724.74 crore annually.
“The burden on exchequer would be Rs 6,795.5 core towards central government employees and Rs 7,929.24 crore towards pensioners during 2016-17, ”said Telecom Minister Ravi Shankar Prasad
Dearness allowance is paid as a portion of basic pay of employees to neutralise the impact of inflation. Pensioners get dearness relief.
The central government revises DA twice in a year on the basis of one year average of retail inflation for industrial workers as per a pre-determined formula.
In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015.
In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.
Cabinet has also approved the universal housing scheme under Prime Ministers name. The scheme was mentioned in the President’s address to the joint session of Parliament and in Finance Minister Arun Jaitley’s Budget Speech.
“The scheme aims to build 2.95 crores houses in rural India. Every unit will have 1, 20,00 in plane areas and 130000 in hilly areas,” Prasad said.