New Delhi: After the release of the latest Consumer Price Index (CPI) data, the Central government employees are eagerly waiting for a hike in DA to help them manage rising inflation. The development comes as the retail inflation in July 2023 has gone up to a 15-month high of 7.44 per cent. The inflation this time is much above the Reserve Bank of India’s target of limiting retail inflation to 4 per cent or lower.
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At this time, a hike in Dearness allowance (DA) is expected for Central government employees. A report by Zee Business claimed that the government is likely to announce a hike in DA after the G20 summit in Delhi which will end on September 10. However, there has been no official confirmation on the matter so far.
Earlier, a Ministry of Finance official had told India.com that the DA hike for the Central government employees should be expected in the third week of September. The official further stated that a 3% DA hike could be expected this time for the employees.
It should be noted that the DA/DR is provided as a relief measure to Central government employees cut down the impact of inflation on the value of the in-hand salary/pension provided to Government employees and pensioners. The DA/DR hike is announced for the government employees based on the formula recommended by the 7th Pay Commission.
Why only 3% DA hike expected?
As the retail inflation in the country has hit a 15-month high in July, the dearness allowance hike works out to be a little over 3 percentage points. However, the Centre doesn’t consider hiking DA/DR above the decimal point. Hence, it is expected that a 3% hike in DA will be announced in September 2023.
If the Centre announces a 3% hike in DA, then the DA rate for central government employees will jump to 45% while the DR rate for pensioners will also increase to 45%. Once announced, the DA hike will be effective from 1st July 2023.
The government employees must note that the Centre revises the DA/DR rate on a half-yearly basis and any hike, if announced, is implemented from 1 January and 1st of July respectively.
3% DA Hike: Who Will Benefit?
Over 1 crore central government employees and pensioners will benefit from the next round of DA/DR hikes. The DA/DR rate was increased by 4% from 38% to 42% in March 2023.
How will DA hike impact govt employees?
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A hike in the dearness allowance will help Central government employees adjust their budget against rising inflation. As DA could increase the overall salary, any hike in the dearness allowance may result in a larger tax liability as well.
