The government approved on Wednesday an increase of 2% in Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners with effect from July 1.
The cabinet agreed to release an additional installment representing an increase of two per cent over the existing rate of seven per cent of the basic pay/pension, to compensate for price rise.
The 2% DA hike, which will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners, is in accordance with the 7th Pay Commission
The Union Cabinet meeting on Wednesday was chaired by the Prime Minister Narendra Modi. The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.6112.20 crore per annum and Rs.4074.80 crore in the financial year 2018-19 (for a period of 08 months from July 2018 to February 2019).
In March the DA for government employees and pensioners was increased to 7% from 5%, with effect from 1 January 2018.
The government also decided to raise the outlay for the proposed India Post Payments Bank (IPPB), meant to increase financial inclusion, by about 80% to Rs 1,435 crore from Rs 800 crore. The increase is meant to cover cost relating to technology and manpower. IPPB, a payments bank which seeks to increase access to banking services in rural areas, will have 650 branches across the country, one in every district.
The Cabinet decision comes less than a week before IPPB’s launch on 1 September by Prime Minister Narendra Modi.