New Delhi, Mar 28: The Union Cabinet Friday approved a two per cent increase in Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners with effect from January 1.

This will benefit about 48.66 lakh Central Government employees and 66.55 lakh pensioners, according to the official statement.

The combined impact on the exchequer on account of the increase in both DA and DR would be Rs 6614.04 crore per annum.

The revision in DA and DR was on the cards as one of the two biannual hikes in the two allowances is usually announced in March, while the other is announced in October ahead of Diwali.

The DA hike is of the expected 2 per cent as it is benchmarked with inflation based on the consumer price index for industrial workers, which has eased this year compared to last year when it was hiked by 3 per cent in October and 4 per cent in March.

Following the hike of 3 per cent in October last year, the DA increased to 53 per cent of the basic pay.

With the increase in DA by 2 per cent in the revision, the allowance has now gone up to 55 per cent of basic pay.

The Government has also set up the 8th Pay Commission, which was approved by the Centre in January this year, for revising the wages and allowances of central government employees.

The formal constitution of the commission, which involves the appointment of a chairman and at least two members, is expected soon.

Although DA and DR will continue to be revised on a biannual basis, this would probably be the final revision before the commission initiates its deliberations with various stakeholders.

The employees forums have also sought the amalgamation of the two components with the basic salary before the next pay commission report is implemented.

Under the 5th Pay Commission, the rule was to merge the basic pay with DA, once the key allowance crosses 50 per cent. The government had then integrated DA with basic pay in 2004. However, this practice was discontinued under the subsequent 6th and 7th Pay Commissions.

(IANS)

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