Central government hikes dearness allowance for employees
16 Sep 2010
The central government today raised dearness allowance by 10 per cent to 45 per cent of basic pay, a move that comes as a festive season bonanza to 5 million employees and 3.8 million pensioners.
The move comes a day after the government hiked the interest rate on provident fund by 100 basis points.
The decision to raise the dearness allowance over the basic pay from 35 per cent to 45 per cent has a cost implication to the exchequer of Rs9,303.2 crore per annum according to a spokesperson. The new allowance would come into effect from July 2010.
The spokesperson said that the dearness allowance increase comes as per the formula based on the Sixth Pay Commission recommendations.
Meanwhile, inflation was at 8.5 per cent in August, with food inflation around 15 per cent as per the new wholesale price index.
The new index is calculated on 2004-05 as the base year as against the 1993-94 of the earlier index. It also has as many as 241 new items added to the basket of commodities for the assessment of the benchmark index.
The DA increase comes ahead of the Dussehra festival in October and Diwali in November.