On Tuesday, the Union Cabinet headed by FM Arun Jaitley passed a resolution to increase the dearness allowance (DA) by 3% for government employees and pensioners, effective from 1 January, 2019 – benefiting 1 crore people all over the country.

The central government employees had been seeking dearness allowance hikes since long, and just a few weeks after introducing personal income tax relief, the Union Cabinet increased the DA by 3% as per recommendations of the 7th Pay Commission – standing at a total of 12% for all government employees and dearness relief to pensioners on Tuesday. The new rates will be effective starting from January 1, 2019 and the cost to exchequer the new DA rates is expected to surpass Rs 9000 crore annually.

A total of 1 crore people including 48.41 lakh central government employees and 62.03 lakh pensioners will be benefited from the revised DA and DR rates. This is the third revision made in DA by the National Democratic Alliance government within one fiscal year – after a 2% increase was approved in March 2018 making it 7% from 5%; and followed by an increase of 2% in August, effective from July 1, 2018.

The dearness allowance is basically meant to help employees to meet the cost of living as per the current inflationary trends – the kind of allowance granted in only in India, Pakistan and Bangladesh. According to information hosted by government websites, DA is currently based on the All India Consumer Price Index (Industrial Workers). However, the central employees are still seeking out for demanding a hike of up to Rs 8,000 in the minimum pay and an increase in the fitment factor from 2.57 times to 3.68 times.