Cabinet okays DA hike for central govt staff
6% hike effective from July 1, 2015; to cost govt Rs 11,091 cr this year, benefit 50 lakh workers, 56 lakh pensioners
The cabinet on Wednesday approved a hike in dearness allowance (DA) for the Centre’s employees and pensioners by 6 percentage points to 119% of the basic pay, effective from July 1, 2015, a move that would cost the exchequer Rs 11,091 crore this year.
About 50 lakh employees and 56 lakh pensioners would benefit from the move that comes ahead of the Seventh Pay Commission report, expected by the end of 2015. Along with the one rank, one pension (OROP) scheme for the armed forces, the pay hikes to be recommended by the commission for government staff would bring tens of thousands of crores of additional burden on the government, making it harder for it to tread the outlined path of fiscal consolidation. The impact of the Pay Commission awards on government finances would be felt the most in the initial two years — FY17 and FY18. The Seventh Pay Commission’s proposals will take effect from January, 2016.
The government had, in April, hiked the DA by 6 percentage points to 113% of the basic pay with effect from January. The DA is intended to mitigate the impact of inflation on the income of employees and the rate of the latest DA increase is computed as the average of 12-month consumer price index-industrial workers from July 1, 2014 to June 30, 2015.
Source:- The Financial Express