The Union government cleared a 1% increase in Dearness Allowance to central government employees and pensioners on Tuesday, and approved a bill to raise the gratuity ceiling for private sector employees.

The government increased Dearness Allowance and Dearness Relief to 5% from 4%, which will benefit around 49.26 lakh central government employees and 61.17 lakh pensioners, an official statement said.
The decisions were taken when Prime Minister Narendra Modi chaired his first Cabinet meeting since expanding his government.
Tuesday’s statement said the decisions regarding the gratuity and the dearness allowance were taken after considering inflation and wage increase in the case of people engaged in private sector. “The government is of the view that the entitlement of gratuity should be revised for employees who are covered under the Payment of Gratuity Act, 1972.”
Experts welcome the move.“Gratuity adjustment was long due and this will handle the inflation increase but the increase in DA is not likely to boost the economy,” DK Joshi, chief economist, Crisil told Hindustan Times.
The Union Cabinet on Tuesday approved a 1% hike in dearness allowance (DA) and dearness relief (DR) to 5%, benefiting 48.85 central government employees and 55.51 lakh pensioners.
“The Union Cabinet chaired by Prime Minister Narendra Modi has approved release of an additional instalment of dearness allowance to central government employees and dearness relief to pensioner with effect from July 1, 2017,” an official statement said.
The DA/DR has been hiked by 1 percent over the existing rate of 4 percent of the basic pay/pension to compensate for price rise and it is in accordance with the accepted formula based on the recommendation of 7th pay commission, the statement said.

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