The Hindu : Cabinet nod for DA-basic pay merger

Online edition of India's National Newspaper
Saturday, Feb 21, 2004

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Cabinet nod for DA-basic pay merger

By Our Special Correspondent

NEW DELHI, FEB. 20. The Union Cabinet today gave its formal approval to the Finance Minister, Jaswant Singh's announcement, in the interim budget, that 50 per cent of the dearness allowance of the Central Government employees would be merged with their basic pay with effect from April 1, 2004, as recommended by the Fifth Pay Commission.

At present, DA is paid to the Central Government employees at the rate of 59 per cent of the basic pay. Following today's decision, DA to the extent of 50 per cent of the basic will be merged with the basic pay and the remaining nine per cent will continue to be paid on the basic pay and dearness pay as per the existing formula.

The decision will be applicable to pensioners also. Shown distinctly as dearness pay or dearness pension, it will be included while calculating the payment of allowances, transfer grant, retirement benefits, etc. The entitlements for LTC, TA/DA while on tour and transfer, and Government accommodation will, however, continue to be governed on the basis of basic pay alone.

The Cabinet decided to allow a special dispensation in the form of 50 per cent of the DA being taken as basic pay for computation of pension in respect of the basic pay received prior to April 1 in the case of employees retiring between April 1, 2004 and January 31, 2005 so that they do not face any loss in fixation of pension, which is based on the average emoluments drawn during the last 10 months in service.

The Cabinet also approved the release of additional instalment of dearness allowance for in-service employees and dearness relief for pensioners at the rate of 2 per cent over the existing rate of 59 per cent with retrospective effect from January 1. The basic pay and pension of all Central Government employees and pensioners respectively will increase by 4.5 per cent and the pecuniary benefit on future instalments of dearness allowance/dearness pay will go up by 50 per cent. Entitlements for other allowances, such as HRA, will also increase.

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