The centre announced an increase in Dearness Allowance (DA) of Central government employees by four per cent to 50 per cent, Union Minister Piyush Goyal announced on Thursday.
The increased allowance will be effective from January 1, 2024.
The announcement comes weeks ahead of the crucial Lok Sabha elections 2024 and will benefit over 48 lakh central government employees and around 70 lakh pensioners.
The combined impact on the exchequer on account of both DA and Dearness Relief would be Rs 12,868 crore per annum.
The government has also increased the House Rent allowance along with DA. "Now gratuity limit has reached to 25 lakh rupees," Union Minister Piyush Goyal said.
A government statement said that the increase is under the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission.
The last DA hike was announced in October last year, with a 4 per cent raise, elevating it to 46 per cent.
Dearness Allowance is a component of the salary structure designed to offset the impact of inflation and raises the overall remuneration of the central government employees.