New Delhi: The Union cabinet chaired by prime minister Narendra Modi today approved to release an additional installment of Dearness Allowance (DA) to Central government employees and Dearness Relief (DR) to pensioners with effect from 01.07.2019 representing an increase of 5% over the existing rate of 12% of the basic pay/pension, to compensate for price rise.  This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission. 

Briefing about the cabinet decision, the union information and broadcasting (I & B) minister Prakash Javadekar said, the combined impact on the exchequer on account of both DA and DR would be Rs. 15,909.35 crore per annum and Rs. 10,606.20 crore in the financial year 2019-20 (for a period of 08 months from July, 2019 to February, 2020).  This will benefit about 49.93 lakh Central government employees and 65.26 lakh pensioners, he added.

The additional financial implication on account of this increase in DA is estimated at Rs 8,590.20 crore per year; and Rs 5,726.80 crore in the current financial year of 2019-20 (for 8 months from July 2019 to February 2020).

The additional financial implication on account of the DR to pensioners is estimated to be Rs 7,319.15 crore per annum and Rs 4,870 crore in the current FY.

DA/DR is paid to Central Government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real value. DA/DR is revised twice a year from 1st January and 1st July.