On September 28, Minister of Information and Broadcasting Anurag Thakur announced that under the 7th Pay Commission, the Union Cabinet has increased the Dearness Allowance (DA) for central government employees and pensioners by 4%.

The rate hike will raise the DA from the current 34% base salary/pension to 38%. From July 1, 2022, central government employees and pensioners will be entitled to higher amounts of Dearness Allowance (DA) and Dearness Relief (DR) respectively, Finance Ministry said.

The Union Minister told a news conference in New Delhi that more than 50 lakh government employees and some 62 lakh pensioners will benefit from the pay rise and pensions ahead of the festival.

Meanwhile, Finance Minister Nirmala Sitharaman added on Twitter that the combined impact of DA and DR on the treasury will be Rs 12,852.5 crore per annum.

Furthermore, the combined impact of DA and DR on the Treasury will be Rs 8,568.36 crore in FY 2022-23 (i.e., the 8-month period from July 2022 to February 2023).

The Union Cabinet approved a 3% increase in DA under the 7th Pay Commission in March, thereby raising DA to 34% of basic income.

DA is a cost of living adjustment allowance paid by the government to public sector employees and their pensioners.

The government usually revises the DA rate every six months. This is done to compensate for the loss of purchasing power of monthly salary/pension wealth due to inflation.