This decision was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi. The new rate will be applicable from July 1.
The release of the additional instalment of DA represents an increase of 1% over the existing rate of 4% of the Basic Pay/Pension, to compensate for price rise. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.
The combined impact on the exchequer on account of both DA and DR would be Rs.3068.26 crore per annum and Rs.2045.50 crore in the financial year 2017-18 (for a period of 8 months from July, 2017 to February, 2018).
Meanwhile, Dearness allowance will be calculated on the basis of basic pay (pay band salary + grade pay). This will not include special salary or individual salary. This order will be applicable on UGC, AICTE, charged employees and casualty wages as well.