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Cabinet approves 8% rise in dearness allowance

The government on Friday increased the dearness allowance for central government employees and pensioners by eight percentage points to compensate for price rise.

The increase is in accordance with the accepted formula based on the recommendations of the Sixth Central Pay commission, Union information and broadcasting minister Ambika Soni told reporters after a meeting of the Union Cabinet here.

The increase would be eight per cent over the existing rate of 27 per cent of basic pay or pension.

The additional installment of dearness allowance would be released with effect from January this year.

The combined impact on the exchequer on account of both dearness allowance and dearness relief would be to the tune of Rs 6969.36 crore per annum and Rs 8131.20 crore in the financial year 2010-2011.

The DA revision is based on the consumer price index (CPI) for industrial workers, which has been showing a steep increase along with other indices of price rise.

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