Ensuring a windfall for over 8 million central government employees and pensioners, the Union Cabinet on Thursday approved release of an additional installment of Dearness Allowance (DA)  to employees and Dearness Relief (DR) to pensioners to compensate for price rise. This is an increase of 10% over the existing rate of 35% of the basic pay/pension.

According to the government, the increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission.

“The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief will be of the order of Rs 9303.2 crore per annum and Rs 6202.1 crore in the financial year 2010-2011 (for a period of 8 months from July 2010 to February 2011),” said the government in a statement.

Inflation stood at 8.5% in August, with food inflation hovering above 15%, as per the new wholesale price index, with the base year now shifted to 2004-05 from 1993-94 and as many as 241 new items added to the basket of commodities to asses the benchmark index. The central government has over 5 million employees and around 3.8 million pensioners, said a spokesperson.

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