7th Pay Commission Dearness Allowance Hike Latest News: How will DA increase impact salary?

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Updated: July 07, 2021 10:37 AM

Dearness Allowance Hike Latest News, DA increase impact on 7th Pay Commission salary: With the soon-to-be-announced DA increase, the monthly pay of Central Government Employees may go up by Rs 3000 to Rs 30,000!

7th pay commission pay matrix, dearness allowance hikeCentral Government Employees and Pensioners get DA/DR as part of their salary/Pension respectively as per the recommendations of the 7th Pay Commission. Representative image

7th Pay Commission (Dearness Allowance Hike 2021) Latest News: With the soon-to-be-announced Dearness Allowance (DA) hike, the monthly pay of Central Government Employees may go up by Rs 3000 to Rs 30,000, according to a report. The monthly pay increase after the DA hike would depend on the respective pay scales of the employees. The Government is also expected to announce a hike in Dearness Relief (DR) for Central Government pensioners.

The Central Government is expected to restore the three frozen instalments and announce the July instalment of DA/DR for employees and pensioners. The announcements will likely take the DA/DR allowance rates to about 30 per cent from the existing rate of 17 per cent of basic pay and pension for employees and pensioners respectively, according to the report.

The basic pay and pension of Central Government Employees and Pensioners range from Rs 23,000 at the entry-level to Rs 2.25 lakh at the top level.

The expected DA and DR hikes would give a boost to consumption ahead of the festival season.

The DA and DR hikes would likely be effective from July 1.

The report said that the total budgetary impact of the DA/DR hike would be around Rs 30,000 crore for the Central Government. The states may also allocate about Rs 60,000 crore in the current financial year for their employees. States generally follow the Central Government in announcing DA/DR hikes.

DA and DR hikes for employees and pensioners are implemented as per the recommendations of the 7th Pay Commission. However, due to the financial stress following Covid-induced lockdown, the Government had frozen DA and DR from January 2020 to June 2021.

The finance ministry had said in an Office Memorandum on April 23, 2020, that whenever the decision to release the future instalment of DA and DR dues from July 1, 2021, would be announced, they would be restored prospectively. “As and when the decision to release the future instalment of DA and DR due from July 1, 2021, is taken by the government, the rates of DA and DR as effective from January 1, 2020, July 2020 and January 1, 2021, will be restored prospectively and will be subsumed in the cumulative revised rate effective from July 1, 2021,” the Finance Ministry had said.

What is Dearness Allowance and Dearness Relief?

Central Government Employees and Pensioners get DA and DR as part of their salary/Pension respectively as per the recommendations of the 7th Pay Commission. DA and DR are provided to offset the impact of inflation.

DA Hike Date: When to expect DA/DR increase?

According to the report, the increased rates with effect from July 1 may be paid before Dussehra (October 15) with arrears of two-three months. This will provide a substantial sum in the hands of employees to splurge on consumption.

At present, there are around 48.3 lakh Union government employees and 65.3 lakh pensioners.

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