The Union Cabinet on Thursday approved the release an additional instalment of dearness allowance (DA) to Central Government employees and dearness relief (DR) to pensioners with effect from July 1, 2021 which works out to a 3% increase over the existing rate of 28% of the Basic Pay / Pension, to compensate for the price rise.

According to an official statement, the combined impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 9,488.7 crore per annum.  This will benefit about 47.14 lakh Central Government employees and 68.62 lakh pensioners.

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

The Centre had earlier approved an increase in DA and Dearness Relief (DR) given to central government employees and pensioners from 17 per cent to 28 per cent.

In view of the Covid-19 pandemic, the government had frozen additional instalments of the DA and DR.

The Centre's DA hike, effective from July 1, had implied that the employees won't get any arrears on non-revision of DA for the previous period.