The Union Cabinet chaired by Prime Minister Narendra Modi has given its approval to the release of an additional instalment of Dearness Allowance (DA) to Central Government employees, and Dearness Relief (DR) to pensioners w.e.f. 1.1.2019 representing an increase of 3% over the existing rate of 9% of the Basic Pay/Pension, to compensate for price rise. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission (CPC). The combined impact on the exchequer on account of both DA and DR would be ₹ 9168.12 crore per annum and ₹ 10696.14 crore in the FY 2019-20 (for a period of 14 months from January 2019 to February, 2020).This will benefit about 48.41 lakh Central Government employees and 62.03 lakh pensioners.

Dearness Allowance increase for central employees and pensioners effective January, raising cost-of-living compensation under pay commission formula. An additional instalment of Dearness Allowance for Central Government employees and Dearness Relief for pensioners is approved effective 1 January 2019, raising the existing rate by three percentage points under the pay commission formula to compensate for price rise; the decision quantifies the recurring exchequer impact and the aggregate budgetary effect for the 14-month period and identifies the population of beneficiaries.