7th Pay Commission News: The DA hike was earlier calculated based on the consumer price index with the base year 2001. The government, however, replaced it with a new consumer price index with the base year 2016 to calculate the DA from September 2020.
7th Pay Commission News: The Centre is likely to announce the second hike in the Dearness Allowance (DA) and Dearness Relief (DR) for employees and pensioners in the first week of September. It is expected that the Modi government will give a 3% hike in DA and DR this time. DA is given to serving government staff while pensioners receive DR.
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The government hikes DA/DR twice a year but makes announcements in March and September, respectively. The hike, however, gets implemented retrospectively from January and July every year.
In January this year, the government hiked DA by 4% to take the level to 50% of the basic. As a result of DA touching the 50% of basic level, other allowances also saw hikes up to 25%.
Also, speculations started doing the rounds that DA may be merged into the basic and will be set at Zero. But the government denied any such plans saying no such matter was under consideration.
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DA hike is likely to be 3% for July-December period of 2024
It is expected that there will be at least 3% hike in dearness allowance for government employees and dearness relief (DR) for pensioners. DA is given to serving employees in respective government departments and dearness relief to pensioners. The DA hike is calculated on the basis of All India Consumer Price Index (AICPI), which tracks the change in retail prices across various sectors.
How is DA calculated for central government employees?
The DA hike was earlier calculated based on the consumer price index with the base year 2001. The government, however, replaced it with a new consumer price index with the base year 2016 to calculate the DA from September 2020.
DA = (Avg of CPI-IW (base 2016=100) for the past 12 months x 2.88 -– 261.4)*100/(261.4))
From December 2023 to June 2024, CPI-IW has increased by 2.6 points from 138.8 to 141.4. As a result, DA hike percentage is likely to increase from 50.28% to 53.36%.
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What will be the exact hike in the salary and pension of central government employees?
Here, we will take two instances for calculation (at minimum basic pay and maximum basic pay) of DA for serving government employees.
In the first example, this central government employee has a basic salary of Rs 18,000 and after the July revision his total salary will jump by Rs 540 on account of 3% DA raise. It will translate to an extra annual income of Rs 6,480 for him.
With 46 per cent DA, their monthly salary will increase to Rs 8,280. Therefore, the annual benefit of this DA hike for these employees translates to Rs 8,640.
In the second example, another employee who gets a basic salary of Rs 56,900 will see his salary going up by Rs 1,707 per month or Rs 20,484 annually.
Meanwhile, the issue of non-payment of 18-month DA arrears was raised again recently in Parliament. Two members of Parliament (MPs) sought answers from the government if it is actively considering to release 18 months dearness allowance payable to central government employees and pensioners which was withheld during the COVID-19 pandemic outbreak. In its reply, the Centre said the decision to freeze three DA instalments was taken in the context of COVID-19, which caused economic disruption, so as to ease pressure on government finances.
