Cabinet approves further DA increase for central government employees

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Good news for the Cabinet, Thursday, October 21, approved a 3% increase in the cost allowance for central government employees and retirees.

In July 2021, Prime Minister Narendra Modi at the head of the Central government decided to increase the Dearness Allowance (DA) and Dearness Relief (DR) paid to government employees and retirees respectively to 28% from 17 %. The new increased DA and DR came into effect on July 1. It should be noted that the increase in AD was frozen in 2020 for the period from January 2020 to June 2021 due to the COVID-19 epidemic.

The DA hike, however, has not been given retrospectively and that is why central government employees who retired between January 2020 and June 2021 were confused about the DA rate that will be applicable for the calculation. their gratuity, collection of leave and other retirement benefits.

In order to put an end to the confusion, the Union Ministry of Finance recently released details relating to the calculation of the gratuity and receipt of leave for central administration employees, who retired between January 2020 and June 2021. The government has also notified the amount of DA that the Center will consider for the calculation of the bonus and the collection of leave.

Later, the Center also decided to increase the rent allowance (HRA) for central administration employees from August 2021.

When issuing the order, the Center said that the DA and HRA of central government employees should be increased on the basis of their base salary. According to rules established by the Center, the HRA would be increased by 3 percent when DA exceeds 25 percent of the employee’s base salary. The Ministry of Spending issued an order in 2017 saying that when the DA rises above 25%, the HRA will be revised automatically.

According to the government decree, the HRA is divided into three categories according to the cities – X, Y and Z. After revision, the HRA for the cities of category X will be 27% of the base salary, similarly, the HRA for Category Y cities will be 18 percent of the base salary while for Category Z cities it will be 9 percent of the base salary.

According to the 7th Pay Commission Pay Matrix, the minimum base salary for central government employees is Rs 18,000. Of this base salary of Rs 18,000, central government employees received a DA of Rs 3,060 until June 2021 at the rate of 17%. Since July 2021, central government employees have started receiving Rs 5,040 each month according to the DA of 28%. This means that there is an increase of Rs 1980 in the monthly salary of the employees. Accordingly, the pension of retirees will also be decided.


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