7th Pay Commission: There’s a good news for central government employees and pensioners as the Union Government is likely to hike the dearness allowance (DA) soon.
The central government increases the dearness allowance periodically to fight against inflation. DA is usually revised in January and July. However, the announcement of the hike in the dearness allowance and the payout comes a few months late.
As we are already in the mid of September, the announcement of the next DA hike is not very far.
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DA Hike Expected: How much dearness allowance hike can a central government employee expect this time?
The DA for the central government employees is calculated based on latest Consumer Price Index for Industrial Workers (CPI-IW), as per Economic Times report.
| Month | CPI-IW Base Year 2016=100 | CPI-IW Base Year 2001=100 |
| Jul-22 | 129.9 | 374.112 |
| Aug-22 | 130.2 | 374.976 |
| Sep-22 | 131.3 | 378.144 |
| Oct-22 | 132.5 | 381.6 |
| Nov-22 | 132.5 | 381.6 |
| Dec-22 | 132.5 | 381.6 |
| Jan-23 | 132.8 | 382.464 |
| Feb-23 | 132.7 | 382.176 |
| Mar-23 | 133.3 | 383.904 |
| Apr-23 | 134.2 | 386.496 |
| May-23 | 134.7 | 387.936 |
| Jun-23 | 136.4 | 392.832 |
| Average of AICPI-IW in last 12 months | 382.32 |
Let’s calculate the dearness allowance of central government employees and pensioners.
7th CPC DA% = [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100]
=[{382.32-261.42}/261.42×100]
= 46.24
As per the table, the average CPI-IW for the last 12 months comes at 382.32. As per the formula, DA will be 46.24%. According to the set formula, the DA was coming to 42% (DA was hiked to 42 per cent from January 1, 2023, ignoring the decimal points) that is effective from January 1, 2023, as per calculation of Economic Times.
Therefore, the DA hike from July 1, 2023 will be 46.24%-42% = 4.24%
It can be summed up that the Union government is likely to increase the DA by 4 per cent (ignoring the decimal points).
The central government employees and pensioners currently get a 42 per cent dearness allowance. Following revision, the DA is likely to be increased to 46 per cent, considering a DA hike of 4 per cent. This DA will come into effect from July 1, 2023.
7th CPC Salary Calculator: DA to be hiked by 4%! How to calculate DA for central government employees
Dearness allowance is calculated as a portion of the basic salary of the central government employees. For central government pensioners, it will be dearness relief. So, when DA increases the salary of the central government employees hikes.
For example, a central government employee gets a basic salary of Rs 36,500 per month. At 42%, his/her DA was at Rs 15,330. If DA increases by 4% from July 2023, his/her DA will be hiked to Rs16,790. In this case, his/her in-hand salary is likely to be increased by Rs 16,425-Rs 15,330 = Rs 1,460 per month.
As the DA is effective from July 1, 2023, s/he will also get arrears when it will be paid.
For the retired central government employees, it is dearness relief. It is similar to DA and calculated similarly. So, dearness relief for the central government pensioners likely to be hiked by 4% which will come into effect from July 1, 2023, as per Economic Times report.
DA hike: When can the increase in DA expected?
The DA hike is likely to be announced soon. Last, the DA hike was announced on March 24, 2023, and it became effective from January 1, 2023. In 2022, the DA increase, which came into effect from July 1, was announced on September 28. Over one crore central government employees and pensioners will be benefitted from the DA hike, as per Economic Times report.
