The Dearness Allowance and Dearness Relief increased by 3% | 7th Central Pay Commission (CPC) Background

The Union Cabinet presided over by Prime Minister Narendra Modi, approved the release of an additional instalment of Dearness Allowance to Central Government employees and Dearness Relief (DR) to pensioners with effect from July 1, 2021, representing a 3 per cent increase over the existing rate of 28 per cent of the Basic Pay/Pension.

It has been determined that this increase is in accordance with the accepted formula, which was developed in response to the recommendations of the 7th Central Pay Commission. The combined impact on the exchequer of Dearness Allowance and Dearness Relief would be Rs.9,488.70 crore per annum, which is the sum of the two components. About 47.14 lakh Central Government employees and 68.62 lakh pensioners will benefit from this move.

Reasons to constitute 7th Central Pay Commission (CPC)

The 7th Central Pay Commission (CPC), which was constituted in February 2014 and submitted its report on November 19, 2015. The 7th Pay Commission was established in response to a protracted public outcry by ex-servicemen, including senior officers, following the conclusion of the 6th CPC in 2008.

These protests drew attention to the armed forces’ perceived neglect in matters affecting their pay, pension status, and levels, particularly in comparison to police officers and defence civilians, who were granted time-limited promotions to the highest ranks, Non-functional Upgrade (NFU), and One Rank, One Pension (OROP) by the UPA Government.

To address the armed forces’ dissatisfaction with pay and allowances, the government added an additional term of reference (TOR) to the 7th Pay Commission, not included in the 5th and 6th Pay Commissions, directing the 7th CPC to “review the principles and structure of emoluments of defence service personnel”.

The Armed Forces were not represented in the CPC, since the government refused to recognise their participation. Since the 4th Central Pay Commission introduced the concept of rank pay in 1986, the armed forces have been frustrated and dissatisfied with pay commission recommendations.

Pay commission recommendations affecting armed forces pay and status in comparison to civilian government employees, including police officers who wear rank badges similar to the army, have been a source of frustration and dissatisfaction since that time.

The 7th Central Pay Commission commission consisted of three members and a member-secretary, headed by Ashok Kumar Mathur.

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Source: PIB