The Central government generally revises the DA/DR rate every six months to counteract the diminishing purchasing power of monthly salary and pension wealth caused by inflation.
7th Pay Commission news: The Modi government is expected to announce the hike in the Dearness Allowance (DA) soon for its employees and the dearness relief for pensioners under the 7th Pay Commission. According to the reports, the Centre is likely to make the announcement before the festivities around Diwali. Rumours suggest that the Centre may raise Dearness Allowance by 4% as several government employees and pensioners wait for a declaration on the increase.
DA hike announcement was initially set prior to Dusshera, however, current sources indicate that the government may make the announcement before the festivities around Diwali. Both 68 lakh pensioners and 47 lakh employees are set to gain from the announcement.
The government employees must note that the centre may announce 4 percent DA hike, as per reports. The current DA rate of 42% would become 46% if the government chose to increase it by that much.
This increase would take effect on July 1, 2023, and would result in higher earnings for the month of November as well as back pay for the months of July through October.
When and Why Centre Revises DA/DR?
The Central government generally revises the DA/DR rate every six months to counteract the diminishing purchasing power of monthly salary and pension wealth caused by inflation.
How Are DA, DR Calculated?
In general, the DA is calculated as a percentage of the basic salary and the formula for central government employees is as follows:
Dearness Allowance percent = ((Average of AICPI (Base Year 2001=100) for the past 12 months – 115.76) / 115.76) * 100
Know How DA is Calculated
The basic formula to increase DA is based on the latest Consumer Price Index for Industrial Workers (CPI-IW). Notably, the DA is given to government employees, while DR is given to pensioners.
The DA and DR are hiked twice a year — January and July. Right now, over one crore central government employees and pensioners are getting a 42 per cent dearness allowance.
When last time DA was hiked in March 2023, it was increased by 4 per cent to 42 per cent. Given the current inflation rate, the next DA hike is expected to be 3 per cent this season.
For the employees with a minimum basic salary of Rs 18,000, the current DA at 42% gives a monthly increase of Rs 7,560. With the new DA hike at 46%, this monthly increase will reportedly increase to Rs 8,280. Hence, the employees with this basic salary can anticipate an annual salary increase of Rs 8,640.
For other employees with a maximum basic salary of Rs 56,900, the current DA at 42% gives Rs 23,898 to their monthly earnings. After the DA hike to 46%, this monthly increase will reportedly increase to Rs 26,174. Hence, those with this higher basic salary can look forward to a substantial annual salary increase of Rs 27,312.
Last DA Hike in March 2023
The Central government in March this year granted an additional instalment of Dearness Allowance to Central Governments employees and Dearness Relief to Pensioners with effect from January 1, 2023. The additional instalment of DA led to an increase of 4% over the existing rate of 38% of the Basic Pay/Pension, to compensate against price rise.
