The Center today increased dearness allowance and dearness relief to 4% from existing 2% from January 1, 2017, benefiting 48.85 lakh employees and 55.51 lakh pensioners.

“The Union Cabinet chaired by Prime Minister Narendra Modi has approved release of an additional installment of dearness allowance to central government employees and dearness relief to pensioner with effect from January 1, 2017,” an official statement said.

The DA/DR has been increased by 2 per cent over the existing rate of 2% 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.

This hike in DA/DR will benefit 48.85 lakh central government employees and 55.51 lakh pensioners, it said.

The Confederation of Central Government Employees had termed it as a meagre hike in view of actual rise in cost of living index saying the CPI-IW was far from reality. The union had also said that there was a lot of variation in the rates of price rise of commodities by Ministry of Agriculture and CPI-IW.