DA Hike: All central government employees and retirees receive the Dearness Allowance (DA). The Central government raises the DA of employees and pensioners twice annually. Initially in January and then again six months later in July. The dearness allowance for employees and pensioners is calculated monthly using the most recent Consumer Price Index for Industrial Workers (CPI-IW) released by the Labour Bureau. The Labor Bureau is a division of the Ministry of Labor.
The DA increase will increase employees’ and retirees’ take-home pay. This is how.
What is 7th Pay Commission
The 7th Pay Commission ensures government employees are paid competitively and fairly. In addition, it examines and recommends modifications to various allowances, including housing allowance, travel allowance, and medical benefits. The Commission uses the Aykroyd formula to determine how much an employee should earn. This method considers the impact of price increases on essential products on the cost of living. Additionally, the Commission evaluates and recommends modifications to pension calculations.
In addition, the Commission suggested a new Pay Matrix system that will enable government employees to see where they are in their careers and how much they can expect to earn as they advance. This will also increase the pay structure’s transparency and reduce employees’ confusion regarding their level, salary calculation, etc. The Commission also sought to raise the monthly minimum wage for government employees, which was set at Rs. 18,000.
How much DA Increase has the Central Government authorized?
The DA is calculated as a percentage of the base compensation and is adjusted annually. This week, the Centre made an important announcement for central government employees. The Union Cabinet approved a 4% increase in Dearness Allowance (DA), resulting in a salary increase for Central government employees. This DA increase is intended to assist workers in combating inflation and keeping pace with rising prices.
DA is determined as a percentage of a worker’s base compensation. Typically, it is revised twice yearly to adjust for inflation. It also correlates to the Industrial Workers’ Consumer Price Index (CPI-IW). This year’s DA increase will be 4%.
This DA increase will affect the salaries of over 48 lakh central government employees and 67 lakh pensioners. This will provide them with a much-needed salary increase and result in the release of arrears for July to October. This is the first DA increase under the seventh pay commission, and it is a respite to many central government workers who have been suffering from high inflation.
The DA increase will also result in pension increases for Central government retirees. The DA increase will also increase the Fitment Factor, which is added to a worker’s base pay to determine their total compensation.
How Much Salary Hike Will Central Government Employees Get
The Centre announced a salary increase for central government employees during the festive season, bringing joy to them. The DA increase will aid them in combating rising inflation, a significant concern. It is also advantageous for retirees, as the DA percentage is added to their monthly pensions. The 4% DA increase will increase the take-home pay of Central employees and pensioners. The increase is anticipated to be reflected in October or November compensations.
The DA increase is calculated using the Labour Bureau’s Consumer Price Index for Industrial Workers (CPI-IW), published by the Ministry of Labor and Employment’s Labour Bureau. Twice per year, in January and July, the DA is revised.
The DA is computed as a percentage of the employee’s base pay. Consequently, the employee’s take-home pay increases whenever the DA is increased. Using the current rate of 42 percent DA, a person with a basic salary of Rs 18,000 would earn Rs 7,560 per month. At 46%, their monthly income will increase to Rs 8,280. The increase in DA will aid the government in combating inflationary pressures and achieving its fiscal objectives.
How Much Arrears Will Central Govt Employees Get?
The government compensates employees for the rising expense of living with DA. The DA is revised twice per year, in January and July, based on the Industrial Workers’ Consumer Price Index (CPI). The CPI for June 2023 has increased by 3.24 percent and will increase further in July, resulting in a likely 4 percent increase in the DA.
The increase in DA will benefit approximately one billion central government employees and retirees. Long anticipated, the decision on the DA increase is viewed as a Diwali present from the government to its employees.
According to Shiv Gopal Mishra of the National Council of JCM, Staff side, the DA arrears for a Level-1 employee will range between Rs 11,880 and Rs 37,554. The DA arrears for Level-13 and Level-14 employees will range between Rs 1,44,200 and Rs 2,18,200.
The Union Cabinet announced on October 18, 2023, that the Dearness Allowance (DA) for central government employees and the Dearness Relief (DR) for central government pensioners have increased by 4%. With the latest increase, DA for Central government workers and DR for retirees will reach 46%. This action will benefit approximately 48.67 million Central employees and 67.95 million Central retirees. DA and DR will apply retroactively to Central government employees and beneficiaries beginning July 1, 2023.
How Does the Government Calculate the Increase in DA?
The increase in DA and DR is determined by the percentage increase in the 12-month moving average of the All India Consumer Price Index (AICPI) through June 2022. Even though the Central government revises the allowances annually on January 1 and July 1, the decision is typically made in March and September.
Dearness Allowance Percentage = ((Average All-India Consumer Price Index (Base Year 2001=100) – 115.76)/115.76) x 100.
For Central Government employees: Dearness Allowance Percentage = ((Average All-India Consumer Price Index (Base Year 2001=100) – 126.33)/126.33) x 100.