The Union Cabinet today approved 7% Additional Dearness allowance (D.A) with effect from 01st July, 2011 to all central government employees. The existing D.A is 51% and now it is increased to 58% from July, 2011. Almost all financial website posted an expectation of declaring 7% D.A from July, 2011.
The benefit of the declaration of new D.A hike is around 50 Lakh employees and the benefit or Dearness Relief for around 40 Lakh pensioners.
Transport allowance also will be increased by 7% due the new D.A Hike. The new transport allowance is shown below for various categories.
When Grade pay is more than or equals to Rs. 5400, the existing Transport Allowance is Rs. 4832 and the New Transport Allowance will be Rs. 5056 (3200 x 158%). There is a difference of Rs. 224.
If the grade pay is below Rs. 5400 and the Basic pay (Basic pay – Grade Pay) is more than Rs. 7440, the existing Transport Allowance is Rs. 2416 and the New increased Transport allowance will be Rs. 2528 (1600 x 158%). The difference is Rs. 112.
When the Grade Pay is less than Rs. 4200 and the Baisc Pay (Basic pay- Grade pay) is less than 7440, the existing Transport allowance is Rs. 906 and the new Transport allowance will be Rs. 948 (600 x 158%). The difference is Rs. 42.
Dearness allowance is calculated on the basis of All India Consumer Price Index (AICPIN) for the past 6 months. The last installment of D.A declared w.e.f January, 2011 was 6%.
The D.A Increase gives more monitory benefit to Central Government Employees than annual increment, which is only 3% of the basic. But the Dearness allowance is more than that the rate of annual increment and it declares twice in a year. The Transport allowance also will be increased accordingly when the D.A is increasing. But not in the case of Annual increment except the clause of the basic reaches Rs. 7440 for grade pay less than Rs. 4200.
We hope that the ad hoc bonus and D.A increase will give some relief to all government employees in this festival season from the escalation of price of all necessary items.