7th Pay Commission DA Hike DA Hike for Central Govt Employees: for The Union government is likely to increase the Dearness Allowance or DA for the central government employees this month. The surge in allowance will help thousands of beneficiaries to cope up with the rising fuel and oil prices after two years of coronavirus pandemic. The Union Cabinet headed by Prime Minister Narendra Modi is expected to discuss Dearness Allowance and Dearness Relief of central government employees on March 16, according to various media reports.
DA Increase for Central Government Employees: A Look at Past DA Hikes
In July, 2021, Centre hiked the Dearness Allowance and Dearness Relief to 28 per cent from 17 per cent. The central government stalled DA for almost one and half years due to coronavirus pandemic. With another 3 per cent hike in October, 2021, the DA for central government employees rose to 31 per cent. The revised DA for the central government employees came into effect from July, 2021.
The Dearness Relief for central government pensioners was also hiked to 31 per cent, effective from July 1,2021.
DA Hike: What to Expect this Time
Now, there have been reports that Centre may again increase the DA by 3 per cent. With this latest increase, DA will stand at 34 per cent of the basic salary. This decision will benefit over 50 lakh government employees and 65 lakh pensioners.
How is DA Calculated?
Dearness Allowance is a component of salary of government employees and pensioners, aimed at soothing the impact of inflation. To cope up with the increasing inflation rates, the effective salary of government employees is revised periodically.
DA is revised twice every year – in January and July. As DA is related to cost of living, it varies from employee to employee based on whether they work in urban sector, semi-urban sector or the rural sector.
In 2006, the Union government changed the formula to calculate the Dearness Allowance for central government employees and pensioners.
For the central government employees: Dearness Allowance % = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)*100.
For Central public sector employees: Dearness Allowance % = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)*100
Now, according to the data by the All-India Consumer Price Index, the central government employees is looking at a hike of 3 per cent in their Dearness Allowance after the latest hike.
Dearness Allowance Hike: How Much Will your Salary Increase?
A central government employee who gets Rs 18,000 per month, will see a hike of 3 per cent in his take-home salary. With 34 per cent DA, his salary will rise by Rs 6,120 per month. As the dearness allowance is linked to the basic salary, a hike in DA will also raise the monthly provident fund (PF) and gratuity amount of the central government employees. So, PF, Travel Allowance and gratuity will go up for the employees and the pensioners.
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