7th Pay Commission: The central government has approved an increase of 2 % in dearness allowance (DA) of employees. The hike will be effective from July 1, 2018. Over 50 lakh employees will get benefits from this decision. Earlier, the central government employees were given a dearness allowance of 7 % which has now been hiked to 9 %. In March, the Narendra Modi government had decided to increase dearness allowance from 5 to 7 %. The increase was in accordance with the recommendations of the 7th Central Pay Commission.

Prime Minister Narendra Modi chaired the cabinet meeting that finalised this decision. According to government’s official press release, “The Union Cabinet has approved to release an additional installment of dearness allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f. 01.07.2018 representing an increase of 2% over the existing rate of 7% of the Basic Pay/Pension, to compensate for price rise.”

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Allowance paid to government employees and pensioners for a cost of living is called dearness allowance (DA). It is a component of salary and is counted as a fixed percentage of the person’s basic salary. It is adjusted according to the inflationary trends to lessen the impact of inflation on government employees.

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Earlier, there were speculations that Prime Minister Narendra Modi would make an announcement on this matter, in his Independence Day speech on August 15.

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