The central government is preparing to announce an increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners under the 7th Pay Commission soon, according to several media reports.
Initial expectations for the DA hike announcement were set before Dussehra, but recent reports suggest that the government might make the announcement before Diwali festivities. Reports suggest that a DA hike of 4 per cent may be announced.
However, a final decision is subject to government approval.
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Possible DA hike announcement details
If the government decides to raise the DA by 4 per cent, it would take the current 42 per cent to 46 per cent.
However, there are chances that the government could hike DA by 3 per cent, which would take it to 45 per cent.
This hike would be effective from July 1, 2023 and will lead to enhanced salaries for the month of November, along with arrears for the period from July to October.
The announcement is likely to benefit 47 lakh employees and 68 lakh pensioners.
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What is DA and DR?
Dearness Allowance (DA) is a cost-of-living adjustment allowance provided to public sector employees by the government, while Dearness Relief (DR) is similar and benefits central government pensioners.
The government revises the DA/DR rate every six months to counteract the effects of inflation. DA is calculated as a percentage of the basic salary, and the formula for central government employees is as follows:
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Impact of 4% DA hike on salaries
Dearness allowance is determined based on the Consumer Price Index for Industrial Workers, a figure released monthly by the Labour Bureau. While there were hopes for a 4 per cent increase, there are chances that it might be raised by 3 per cent.
For those with a minimum basic salary of Rs 18,000, the current 42 per cent DA provides a monthly increase of Rs 7,560. If the DA is increased by 4 per cent to 46 per cent, this will translate to a monthly increase of Rs 8,280. Employees with this basic salary can anticipate an annual salary increase of Rs 8,640.
Meanwhile, individuals with a maximum basic salary of Rs 56,900 currently benefit from a 42 per cent DA, which adds Rs 23,898 to their monthly earnings. Following the DA hike to 46 per cent, this monthly increase is projected to escalate to Rs 26,174.
Therefore, those with this higher basic salary can look forward to a substantial annual salary increase of Rs 27,312.
