New Delhi, August 29: The Union Cabinet on Wednesday approved two percent hike in the dearness allowance (DA) for the central government employees as per the recommendation of the 7th Pay Commission. The employees will get an increased allowance from July.  In March this year, the cabinet increased the dearness allowance from five to seven percent. The allowance is paid to government employees to counter the effect of inflation. It is also paid to pensioners.

The impact on the exchequer on account of both DA and DR would be Rs 6,112.20 crore per annum and Rs 4,074.80 crore in the financial year 2018-19 (8 months from July 2018 to February 2019). The hike will be effected from July 1, 2018, the release said. The decision was taken at the Cabinet meeting chaired by Prime Minister Narendra Modi. The hike will benefit about 48.41 lakh central government employees and 62.03 lakh pensioners.

Meanwhile, lower-level central government employees are to raise minimum pay to Rs 26,000 with fitment factor 3.68. The 7th Pay Commission had proposed to hike minimum pay from Rs 7,000 to Rs 18,000 per month with fitment factor 2.57 for lower-level central government employees. The recommendation was approved by the Cabinet and came into force from January 1, 2016.

There were speculations that the government would announce  a hike in the minimum pay on the Independence day, but, Prime Minister Narendra Modi in his address to the nation did not mention about the increase. PM Modi, however, spoke on a range of issues including One Rank One Pension (OROP) but didn't announce to raise minimum pay beyond the recommendations of the 7th Pay Commission.

(With inputs from PTI)

(The above story first appeared on LatestLY on Aug 29, 2018 01:52 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).