The government on Wednesday approved a hike in Dearness Allowance (DA) and Dearness Relief (DR) benefits given to central government employees and pensioners from 17 per cent to 28 per cent. Sources confirmed that the Union Cabinet has taken a decision to hike DA and DR after it was put on hold last year.

The development is a major relief for lakhs of central government employees and pensioners who have been waiting for the announcement for months.

The move comes on the back of several media reports speculating that dearness allowance and dearness relief benefits under the Seventh Central Pay Commission (7th CPC) would be restored July. The DA and DR hike benefits will come into effect from July 1, 2021. The move is expected to cost the government approximately Rs 34,400 crore.

An earlier report suggested that it could take a while for the employees to get the hiked DA as several approvals are required. For any such delay, central government employees are likely to get arrears accruing from July 1, 2021.

At least three DA instalments were due before the hike was approved by the cabinet — two from last year and one from this year (01.01.2020, 01.07.2020 and 01.01.2021). An 11 per cent DA hike has been approved as part of the three pending instalments.