The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved release of an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to Pensioners w.e.f. 01.01.2016. This represents an increase of 6 percent over the existing rate of 119 percent of the Basic Pay/Pension, to compensate for price rise.

This will benefit about 50 lakh Government employees and 58 lakh pensioners.

The increase is in accordance with the accepted formula, which is based on the recommendations of the 6th Central Pay Commission (CPC). The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of ₹ 6796.50 crore per annum and ₹ 7929.24 crore respectively, in the financial year 2016-17 (for a period of 14 months from January, 2016 to February, 2017).

Dearness Allowance increase for central employees and pensioners implemented under pay commission formula, raising pay and pension entitlements. The Union Cabinet approved an additional instalment of Dearness Allowance for Central Government employees and Dearness Relief for pensioners, effective 1 January 2016, raising the rate by six percentage points under the Sixth Central Pay Commission formula to compensate for price rise. The measure applies to serving employees and pensioners, specifies the beneficiary populations, and quantifies the resulting increase in recurring central exchequer expenditure for the implementation period.