The Union Cabinet, chaired by the Prime Minister Shri Narendra Modihas approved to release an additional instalment 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.

The combined impact on the exchequer on account of both Dearness Allowance and Deamess Relief would be ₹ 6112.20 crore per annum and ₹ 4074.80 crore in the financial year 2018-19 (for a period of 08 months from July, 2018 to February, 2019).

This will benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners.

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

Dearness Allowance increase for central employees and pensioners approved to adjust pay and pensions for price rise effective mid 2018. Approval was granted for an additional Dearness Allowance for Central Government employees and Dearness Relief for pensioners, increasing DA/DR by two percentage points effective 1 July 2018 to compensate for price rise; the increase follows the accepted formula based on recommendations of the 7th Central Pay Commission and identifies the resulting exchequer impact and beneficiary population.