Centre hikes DA by 4% for govt staff

New Delhi: The Union government on Wednesday raised the dearness allowance (DA) by four percentage points to 46% for 4.86 million Central government employees along with a similar increase in the dearness relief (DR) for 6.8 million pensioners ahead of the festive season and crucial assembly polls even as retail inflation eased substantially in September.

The new rates will be applicable from July 1, 2023, Union Information and Broadcasting Minister Anurag Thakur said after the cabinet meeting. The decision will have a combined annual impact of Rs 12,857 crore on the exchequer.

The Cabinet, chaired by Prime Minister Narendra Modi, took the decision in view of the three-month-long festive season, involving Navratra, Diwali, Chhat Puja, Gurupurab and Christmas, an official said requesting anonymity.

Both employees and pensioners will get the raised amount retrospectively from July 1, 2023, the official said. “This increase is broadly in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” he added.

The decision to raise DA, a routine, comes week after the Election Commission announced the assembly polls in five states -- Mizoram, Chhattisgarh, Madhya Pradesh, Rajasthan and Telangana – starting from November 7.

Experts said the move will bring double cheers for more than 10 million families in general, and voters of the five states in particular, as DA relief comes week after retail inflation also cooled off significantly due to a sharp correction in vegetable inflation. They, however, cautioned that the deteriorating geopolitical situation in the Middle East may again push up food and fuel rates globally, adversely impacting India. The country imports 87% of the crude oil it processes.

India’s retail inflation, as measured by the Consumer Price Index (CPI), had jumped to a 15-month high to 7.44% in July from 4.87% the preceding month, with food inflation at its highest in 39 months because prices of vegetables, cereals and pulses spiked.

It remained above the Reserve Bank of India (RBI)’s upper tolerance band of 6% in August at 6.83%, before easing to 5.02% in September. Benchmark Brent crude jumped over 3% to $92.61 a barrel during the Wednesday trade due to a blast at a Gaza hospital.