Experts citing the past instance of 2004 and current inflationary situation are saying that the Centre might consider merging DA into the basic pay. Other allowances like house rent allowance, children’s education allowance, special allowance for childcare, hostel subsidy and gratuity ceiling got revised automatically post DA hike to 50% in January this year.
7th Pay Commission News: The Centre is expected to merge the dearness allowance of government employees and dearness relief of pensioners from July when the next scheduled revision in DA takes place.
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Central and state government employees get dearness allowance (DA) and pensioners receive dearness relief (DR) as a cost-of-living adjustment. There are over 50 lakh central government employees and 67 lakh pensioners who will be benefited from this revision in DA and its merger into basic pay.
In March this year, the Modi government hiked the DA for government employees by 4% to 50%, which triggered a speculation that the allowance would now be merged into the basic pay. The basis of this speculation was an earlier instance of 5th Pay Commission in 2004 when the government had merged DA into the basic salary after it hit the 50% ceiling. However, there were no such measures recommended by the 6th and 7th Pay Commissions.
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Experts citing the past instance of 2004 and current inflationary situation are saying that the Centre might consider merging DA into the basic pay. Other allowances like house rent allowance, children’s education allowance, special allowance for childcare, hostel subsidy and gratuity ceiling got revised automatically post DA hike to 50% in January this year.
According to these experts, it is highly likely that DA-basic pay merger will be announced once the new government is formed at the Centre. The next hike in DA is due in July. After the DA is merged into the basic pay, this allowance will again start from ‘Zero’.
Take a look at this calculation suggesting the minimum hike in the basic pay (Level-1) of a government employee (Level-1) based on the 7th Pay Matrix. There are around 18 levels. Employees under Level 1-5 are in the grade pay 1800-2800.
Let’s take an example of a government employee who falls under Level-1 category with a grade pay of 1800-2800. As per the 7th Pay Matrix, the minimum basic pay is Rs 18,000 in Level 1 and goes up to Rs 29,200. With the DA now standing at 50% or Rs 9,000 for Level-1 staff, the basic pay for this employee will be revised to Rs 27,000 and the DA will start all over again from ‘Zero’.
DA hike calculation
The DA for employees and Dearness Relief for pensioners are calculated based on the All-India Consumer Price Index (AICPI). The government revises DA and DR twice in a year, in January and July, respectively.
Dearness Allowance % = ((Average of AICPI (Base Year – 2001=100) for the past 12 months -115.76)/115.76) *100
