7th Pay Commission: The central government is likely to increase dearness allowance for its employees by 3 per cent in September, with effect from July 2024.
7th Pay Commission DA Hike: Central government employees are likely to get a bonanza soon as the Centre might increase dearness allowance (DA) for its employees by 3 per cent in September, with effect from July 2024, according to people familiar with the matter. The sources said a 3 per cent DA hike is sure, but it can also increase to 4 per cent.
“A DA hike of 3-4 per cent is likely to be announced by the central government in September. The 3 per cent hike is confirm, but it can be 4 per cent also, depending upon inflation conditions,” a source said.
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Currently, the dearness allowance stands at 50 per cent of the basic pay. There are talks that the DA will be merged with the basic pay as per the 7th Pay Commission.
On this, the source said, “The DA will not be merged with the basic pay in case of dearness allowance beyond 50 per cent. It will continue as it is until the 8th Pay Commission is formed. Instead of the merger, there are provisions of increasing allowances, including HRA, in case of DA crossing 50 per cent, which has already happened.”
Importantly, in the 4th Pay Commission, the DA had reached as high as 170 per cent.
In the previous hike in March 2024, the central government had raised dearness allowance by 4 per cent to 50 per cent of the basic pay. The government has also increased dearness relief (DR) by 4 per cent.
DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year, with effect from January and July.
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On the 8th Pay Commission, in July, the Confederation of Central Govt Employees and Workers has made several demands ahead of the Budget 2024, including the immediate constitution of the 8th Pay Commission and restoring the old pension scheme.
Minister of State for Finance Pankaj Chaudhary said in a written reply in the Rajya Sabha on July 30 said, “Two representations have been received for constitution of the 8th Central Pay Commission in June 2024. No such proposal is under consideration of the government, at present”
So, there is no proposal within the government for now regarding the constitution of the 8th Pay Commission.
The 7th Pay Commission was constituted in February 2014. Its recommendations were implemented from January 1, 2016. Usually, the pay commission is constituted by the Central Government every 10 years to revise the remuneration of government employees.
How Does Govt Calculate DA Hike?
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All-India CPI-IW. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September/October.
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
