7th Pay Commission: Central government employees and pensioners are eagerly awaiting news on the much-anticipated dearness allowance (DA) and dearness relief (DR) hike linked to the 7th Pay Commission. Serving employees in various government departments receive DA, while retirees get DR as a cushion against rising inflation.
Over 1 crore central government employees and pensioners are left wondering when the official announcement will be made regarding the hike in DA and DR. This decision holds significance as this round of DA hike is due from July 1, so if the government announces the hike this month, employees and pensioners will receive three months’ arrears along with their hiked salary and pension.
Various media reports speculate that there might be an announcement on the DA hike on Wednesday, October 9, when the Union Cabinet holds a meeting. But, sources suggest that central government employees may have to wait for some more time as the much-awaited announcement is expected to be made just before the Diwali festival this year. Diwali is on November 1 this year. In the past, the DA hike announcement has also been made around Diwali.
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What is DA?
Dearness Allowance (DA) is a percentage of the basic salary of the employees, which is given to reduce the impact of inflation. It is increased from time to time according to the changes in the cost of living. Every six months, DA adjustments are made, giving government employees relief from inflation.
DA and DA hikes are calculated on the average of the All India Consumer Price Index (CPI-IW) for industrial workers. Generally, this revision takes place on January 1 and July 1 every year.
DA calculation formula:
DA for central government employees is calculated as follows:
The increase in DA and DR is calculated based on the percentage increase in the 12-month average of the All India Consumer Price Index (CPI-IW) for industrial workers. The government usually revises these allowances on 1 January and 1 July every year.
DA for central government employees is calculated as follows- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
Possible hike in DA for July-October:
Earlier this year, DA was hiked by 4% from January 2024, taking it from 46% to 50%. Now, another hike is expected from July 2024. As per the recent AICPI data, it could rise to 53.36%. In such a scenario, the Modi government is expected to hike DA by 3%, which could take the DA to 53%.
This decision will result in a burden of around Rs 13,000 crore on the government exchequer. Employees are eagerly waiting for this big gift, which will improve their standard of living.