Central D.A. from July 2011 and bonus for Rail staff to be announced today

The Cabinet may on Thursday raise 
dearness allowance (DA) for central 
government employees and dearness 
relief (DR) for pensioners by 7 percentage 
points to 58% of the basic pay/pension.

The last hike in DA was in March when the 

government increased it by 6 percentage points. 

The Cabinet is expected to take a decision in this

regard on Thursday, sources said. The Cabinet is 

also expected to clear a proposal for giving

 productivity linked bonus to Railway employees 

for the year 2010-11, sources added.

With the proposed DA hike, the basic pay of the

 central government employees (or pensioners as
the case may be) would go up by 36% over a 
two-year period.

 The hikes will be implemented from July 1, 2011. 
The combined impact on the exchequer on account 
of both DA and DR increase between January 2009
 and January 2011 is estimated to have crossed 
Rs 16,000 crore. The measure is set to provide 
relief to a total of around 5 million central 
government employees and around 4 million 
pensioners.

The change in DA, which is linked to the consumer 
price index, has lead to a further change in other 
allowance structure since rate breached the 50% 
of basic pay mark in March. For instance,
 payments like conveyance allowance and 
children’s education allowance have also
gone up by 25%. This hike is in accordance
 to the formula given in the sixth pay commission 
report which says: “The rates of these allowances 
will be increased by 25% every time the DA 
payable on revised pay scales goes up by 50%.”
As a result, there will also be an increase in the 
special compensatory allowance for the central
government employees posted in remote areas
 such as the north-east and Jammu & Kashmir.
 Their special allowance also goes up by 25% 
the moment the 50% trigger was breached. 
The increased DA and DR are expected to help
 the households of central government employees 
and pensioners who are already exposed high 
inflation.

Source : The Financial Express