Ahead of Diwali festival, the Union Cabinet on Wednesday increased the dearness allowance (DA) and dearness relief by 4 per cent effective 1 July 2022, benefiting 41.85 lakh central government employees and 69.76 lakh pensioners.

The additional instalment of DA and dearness relief (DR) is an increase of 4 per cent over the existing rate of 34 per cent of basic pay/pension.

The combined impact on the exchequer on account of both DA and DR would be Rs 12,852.5 crore per annum, said Information and Broadcasting Minister Anurag Thakur while briefing reporters about the decisions of the Union Cabinet.

Central government employees and pensioners will become entitled to higher amount of DA and DR respectively, with effect from 1 July 2022, Thakur said.

The increase in the DA and DR is based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June 2022.

The impact of enhanced dearness allowance to the employees on exchequer is estimated at Rs 6,591.36 crore per annum and Rs 4,394.24 crore in 2022-23 (eight months from July 2022 to February 2023).

In case of dearness relief, the impact would be Rs 6,261.20 crore per annum and Rs 4,174.12 crore in the current fiscal.