India hikes 3 percent dearness allowance to employees ahead of election

The Narendra Modi government in India announced Tuesday 3 percent hike in dearness allowance to central government employees and pensioners just ahead of Lok Sabha elections. The increase will be effective from January 1, 2019, and to benefit 1.1 crore individuals.

The hike will be based on recommendations of Seventh Central Pay Commission. The current DA rate is 9 percent.

Briefing to the journalists finance minister Arun Jaitley said it will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners.

He added the combined impact on exchequer on account of DA and DR would be Rs 9,168.12 crore per annum and Rs 10,696.12 crore in 2019-20 (from January 2019 to February 2020).

DA is a cost of living adjustment allowance based on inflationary trends and counted as a fixed percentage of basic salary. Only three countries in the world have such salary arrangement. The other two nations are Pakistan and Bangladesh.

Central Government employees in India have been lately demanding increase of minimum pay of up to Rs 8,000 and hike in fitment factor to 3.68 times, which is currently 2.57 times, beyond the recommendations of the 7th Pay Commission.

Earlier, Chief of National Joint Council of Action (NJCA) Shiv Gopal Mishra said central government may offer such hike in the salaries of Central Government employees.