Central employees might receive an early Diwali gift in the form of a potential increase in dearness allowance (DA) by the Modi government. Currently, central employees receive a DA rate of 42 percent, and there’s speculation about a 3 percent increase. If this occurs, the DA will rise to 45 percent, resulting in a significant salary increase for employees.
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The central government revises DA twice a year. The first amendment of the year was made on March 24, 2023, and it became effective from January 1, 2023, benefiting employees and pensioners. It raised the DA from 38 to 42 percent. This time, employees are requesting a 4 percent increase, but reports suggest the government may opt for a 3 percent raise, effective from July 1, 2023.
DA hikes are determined based on inflation rates, with higher inflation leading to greater expectations for employee DA increases. Generally, DA for central employees is revised every January 1 and July 1, based on the Consumer Price Index for Industrial Workers (CPI-IW) data. In July 2023, the CPI-IW increased by 3.3 points to 139.7, marking a 0.90 percent rise from the same period the previous year.
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While there’s been no official statement from the Central Government regarding the anticipated DA hike before Diwali, it’s based on employee demands in various reports. If the government decides in favor of employees due to inflation rates, it will benefit over one crore employees and pensioners, including 47.58 lakh central employees and approximately 69.76 lakh pensioners.
If a 3 percent DA hike is granted, it will increase the DA to 45 percent. For instance, if an employee has a basic pay of Rs 18,000 and currently receives a 42 percent DA, it amounts to Rs 7,560. With the increase, it would become Rs 8,100, resulting in a direct salary increase of Rs 540.
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For an employee with a maximum basic pay of Rs 56,900, the current DA is Rs 23,898, while it would rise to Rs 25,605 with a 3 percent increase.
