In a decision that raised eyebrows coming just ahead of Assembly elections in States including Maharashtra and Haryana, the Union Cabinet on Wednesday approved a decision to release an additional 5% dearness allowance for Central Government employees over and above the existing rate of 12% of basic pay. A similar increase of 5% in dearness relief was also announced for pensioners.
“The Union Cabinet today approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners with effect from July 1, 2019, representing an increase of 5% over the existing rate of 12% of the Basic pay/Pension, to compensate for price rise,” the government said in a release. “This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.”
The Election Commission of India (ECI) said that there was nothing wrong with this announcement, even though it comes just a little more than a week before the elections in Maharashtra.
“This is linked to indexation as per the formula laid down for all central government employees,” an Election Commission official, speaking on condition of anonymity, told The Hindu . “It is not State-specific.”
The combined impact on the exchequer on account of both the Dearness Allowance and Dearness Relief payouts will be ₹15,909.35 crore per annum and ₹10,606.20 crore in the financial year 2019-20 (for a period of eight months from July 2019 to February 2020). This would benefit about 49.93 lakh Central Government employees and 65.26 lakh pensioners.
Taken separately, the Dearness Allowance increase is estimated to cost ₹8,590.20 crore per year and ₹5,726.80 crore in the current financial year. The increase in the Dearness Relief to pensioners is estimated to cost ₹7,319.15 crore per annum and ₹4,870 crore in the current financial year.
Dearness Allowance and Dearness Relief is paid to Central Government employees and pensioners, respectively, to adjust the cost of living and to protect their basic pay or pension from erosion in real value.
