7th Pay Commission News: Central government employees awaiting dearness allowance (DA) hike for July-September will very soon receive a good news. The Narendra Modi government is expected to announce the next DA hike in the first week of September, according to reports.
The last DA hike of 4% was announced in March this year but was implemented retrospectively from January 2024, taking the dearness allowance level to 50% of the basic. After the DA touched the 50% of basic level last time, speculations were doing the rounds that the government may merge the DA into the basic now and start afresh from 0% DA. But the government has maintained throughout that any such matter is not under consideration.
On the speculation that the DA gets automatically merged into the basic pay, a senior finance ministry official clarified that it was the 5th Pay Commission which suggested merging dearness allowance into the basic, every time the consumer price index rises by 50% over the base index used by the last pay commission. Accordingly, in February 2004, the DA at 50% was merged into the basic and a precedent was set. However, later the 6th Pay Commission recommended not to merge DA with basic pay even when the dearness allowance breaches the 50% of basic salary mark.
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How much hike in DA can government employees and pensioners expect in September?
It is expected that there will be at least 3% hike in dearness allowance for government employees and dearness relief (DR) for pensioners. DA is given to serving employees in respective government departments and dearness relief to pensioners. The DA hike is calculated on the basis of All India Consumer Price Index (AICPI), which tracks the change in retail prices across various sectors.
How is DA calculated for central government employees?
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
DA Calculation for Public Sector Employees:
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100
Here, AICPI means the All-India Consumer Price Index.
What is the DA hike impact on other allowances?