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Cabinet Approves 4% Increase in Dearness Allowance for Central Government Employees and Pensioners

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Union Commerce and Industry Minister Piyush Goyal addresses a Cabinet Briefing, in New Delhi on March 7, 2024. | Photo Credit: ANI

The Union Cabinet, in its recent meeting held in New Delhi on March 7, announced a significant increase in Dearness Allowance (DA) for Central government employees and Dearness Relief (DR) for pensioners, effective from January 1, 2024. This decision aims to mitigate the impact of rising prices and provide financial relief to employees and pensioners.

Key Decisions

  • 4% Hike in DA and DR: The Cabinet approved a four-percentage-point increase in DA and DR over the existing rate of 46% of the basic pay/pension.
  • Additional Allowances: Other allowances, such as house rent allowance, canteen allowance, and deputation allowance, will also be increased subsequently.

Financial Implications

  • Exchequer Impact: The combined impact on the exchequer, including both DA and DR, is estimated to be ₹12,868.72 crore per annum.
  • Beneficiaries: This decision will benefit approximately 49.18 lakh Central government employees and 67.95 lakh pensioners across the country.

Implementation and Formula

  • Seventh Central Pay Commission: The increase is in accordance with the accepted formula based on the recommendations of the seventh Central Pay Commission.
  • Annual Expenditure: The Centre will spend ₹15,014 crore towards the payment of additional DA in this financial year.

Union Response and Demands

  • Union Strikes: Ahead of the General Election, major unions of Central government employees have planned an indefinite strike to demand the implementation of the old pension scheme.
  • Employee Concerns: Employees have raised concerns regarding anomalies in promotions, pension, and salaries, urging the Centre to address these issues.

Enhanced Benefits

  • Transport Allowance: Transport allowance, canteen allowance, and deputation allowance will also see a 25% increase.
  • House Rent Allowance: House rent allowance has been raised from 27%, 19%, and 9% of the basic pay to 30%, 20%, and 10%, respectively.
  • Gratuity: Benefits under gratuity will be increased by 25%, with an increased ceiling of ₹25 lakh from the existing ₹20 lakh.


The decision to increase DA and DR, along with other allowances, reflects the government’s commitment to supporting its employees and pensioners during periods of economic uncertainty. However, challenges such as union demands and financial implications need to be addressed to ensure sustainable welfare measures for government personnel.

Source: The Hindu

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