Central Government Employess DA Hike :Holi Gift

Central Government Employess DA Hike :Holi Gift

Holi gift for central govt employees: DA hike

- 6 per cent increase announced, union says change has already been factored in by pay panel

New Delhi, March 23: The Centre today hiked the dearness allowance by 6 per cent, "a Holi gift" that benefits over 1 crore central government employees and pensioners.

Union minister Ravi Shankar Prasad, announcing the cabinet decision, described the hike as "a Holi gift" and said the allowance was meant to help counter the pressures of inflation. The increase will cost the government an additional Rs 14,725.74 crore. The hike will take effect from January 1, 2016.

The combined impact on the exchequer on account of dearness allowance and dearness relief would be of Rs 6,796.50 crore and Rs 7,929.24 crore, respectively, in the financial year 2016-17 (for a period of 14 months from January 2016 to February 2017), he said.

Dearness allowance is paid as a portion of basic pay of employees to neutralise the impact of inflation. Pensioners get dearness relief. The DA, which will benefit 50 lakh central government employees and 58 lakh pensioners, will go up from the existing 119 per cent to 125 per cent.

The move comes ahead of elections in five states, including Bengal and Tamil Nadu.

Underlining the government's sensitivity to a "squeeze" on the middle class, earlier this month it agreed to roll back plans to tax employees' provident fund (EPF) withdrawals following a backlash from the salaried.

The DA increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission.

The central government revises DA twice in a year on the basis of the one-year average of retail inflation for industrial workers in line with a pre-determined formula.

In September last year, DA was increased to 119 per cent from 113 per cent with effect from July 1, 2015. In April last year, the government had hiked DA by 6 percentage points to 113 per cent of the basic pay with effect from January 1, 2015.

However, the increase failed to bring cheer to employees' unions. M. Krishnan, the secretary-general of the Confederation of Central Government Employees and Workers, said "the 7th Central Pay Commission in its report had already factored in 6 per cent hike in DA to be paid from January 1, 2016, and has recommended merger of DA with the basic salary for calculating the pay scales".

The government has accepted the report and has appointed a committee of secretaries to process the report before the cabinet nod.

The government has provisioned Rs 70,000 crore in the Union budget, 2016-17, to meet the demand for the new pay commission award that will be made effective from January 2016.

The report of the Seventh Pay Commission was presented to finance minister Arun Jaitley in November with a recommendation for raising minimum pay to Rs 18,000 a month from the current Rs 7,000 while the maximum pay - drawn by the cabinet secretary - has been fixed at Rs 2.5 lakh per month from the current Rs 90,000.

The panel recommended a 14.27 per cent increase in basic pay. The overall increase in salary, allowances and pension is 23.55 per cent. The increase in allowances will be higher by 63 per cent while pension will rise 24 per cent.

Source:TelegraphIndia