Union Cabinet on Thursday approved a 3 percent increase in the Dearness Allowance of Central Government employees and pensioners. This will come into effect from 1st July 2021. This will be an additional 3% payable on the existing 28% of basic pay and pension. The decision will benefit 47.14 lakh central government employees and 68.62 lakh pensioners.

The move would, however, put a burden of Rs 9,488.70 crore on the government's exchequer every year.

In July, the Central government had restored Dearness Allowance (DA) benefits for its employees and pensioners and had increased the DA from 17 percent to 28 percent. 

The DA is a part of the salary given to government employees and pensioners. Notably, the payment of DA of employees has not been revised since January 2020. 

In view of the COVID-19 pandemic, the Union Government had frozen the three additional installments of the DA and DR, which were due from January 1, 2020, July 1, 2020, and January 1, 2021.