The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved a hike of 3 percent in the Dearness Allowance or DA for the central government employees and Dearness Relief or DR for pensioners.

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With the latest increase effective from January 2022, the DA and the DR now stand at 34 percent.

Dearness Allowance is a component of salary of central government employees particularly aimed at giving them relief from the impact of inflation. Dearness Relief is what is given to pensioners.

"This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission," said the government.

The decision is likely to benefit about 47.68 lakh central government employees and 68.62 lakh pensioners amid rising fuel and oil prices and inflation.

The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 9,544.50 crore per annum.

The government revises DA and DR twice every year -- in January and July. However, they differ from person to person based on where they are -- urban sector, semi-urban sector or the rural sector.

The government hiked the DA and DR for the central government employees and pensioners to 28 percent from 17 percent in July 2021 after keeping them unchanged for more than one-and-half years owing to the COVID-19 pandemic. In October 2021, the DA and DR again saw a jump of 3 percent.

First Published:Mar 30, 2022 1:42 PM IST