After a five per cent hike, the dearness allowance for the government employees will increase to 39 per cent
DA Hike 7th Pay Commission: Even as the inflation is high and remains above the RBI’s comfort zone of 2-6 per cent, the central government is likely to increase the dearness allowance for its employees by five per cent to provide them respite from high price levels in the economy, according to media reports. The dearness allowance (DA) is set to be increased next month as it is revised twice a year — January and July.
The DA is revised based on the changes in the All India Consumer Price Index (AICPI). Now, as the AICPI is prevailing high, the chances of government employees getting a raise in dearness allowance is also high. The retail inflation in May stood at 7.04 per cent, which is above the RBI’s comfort level of 2-6 per cent.
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The Union Cabinet in March approved to increase 3 per cent in dearness allowance (DA) under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income. Over 50 lakh government employees and 65 lakh pensioners are getting profit from this move.
“The Union Cabinet chaired by the Prime Minister, Narendra Modi, has given its approval to release an additional instalment of dearness allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f. January 1, 2022, representing an increase of 3 per cent over the existing rate of 31 per cent of the basic pay/ pension, to compensate for price rise,” the Prime Minister’s Office had said in a statement.
Now, after another five per cent hike, the dearness allowance for the government employees will increase to 39 per cent.
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According to reports, the issue of 18-month DA arrears payment from January 2020 to June 2021 may also be addressed soon and the employees of the central government may also receive Rs 2 lakh in pending arrears in one go. The amount of DA arrears is decided by the employees’ pay band and structure.
The central government had held back three instalments of DA and DR for January 1, 2020; July 1, 2020; and January 1, 2021, in view of the unprecedented situation which arose due to the COVID-19 pandemic. Finance Minister Nirmala Sitharaman has said the holding back of DA and DR saved about Rs 34,402 crore, in a written reply to a query in the Rajya Sabha in August last year.
Dearness allowance is given to government employees, while the dearness relief is for pensioners.
How is DA under 7th Pay Commission Calculated?
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
