Dearness allowance is revised twice a year — January and July. (Representative)
7th Pay Commission: As per the formula for DA calculation based on the latest Consumer Price Index for Industrial Workers (CPI-IW), a 4 per cent hike is likely for central government employees
Even as the central government is likely to announce a DA hike for its staff between Navratri and Diwali, the employees are waiting for the bonanza. According to media reports, the DA hike is likely to be 4 per cent, against 3 per cent expected earlier. The hike, once announced, will become effective from July 1, 2023.
As per the formula for DA calculation based on the latest Consumer Price Index for Industrial Workers (CPI-IW), a 4 per cent hike is likely for central government employees, according to an ET report. After this increase, the dearness allowance will reach 46 per cent.
Going by the media reports of a 4 per cent DA hike, how much is the salary hike likely? If somebody’s salary is Rs 50,000 per month and has Rs 15,000 as the basic pay. He or she now gets Rs 6,300, which is 42 per cent of the basic pay. However, after the expected 4 per cent hike, the employee will get Rs 6,900 per month, which is Rs 600 higher. So, if someone has a Rs 50,000 salary a month with Rs 15,000 as the basic pay, his or her salary will rise by Rs 600 per month.
DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year — January and July. Currently, over one crore central government employees and pensioners are getting a 42 per cent dearness allowance.
In the last hike in March 2023, the DA was increased by 4 per cent to 42 per cent. Given the current inflation rate, the next DA hike is expected to be 4 per cent, as per various reports.
Recently, various state governments, including Madhya Pradesh, Odisha, Karnataka, Jharkhand and Himachal Pradesh, increased dearness allowance for their state government employees.
How Does Govt Decide On The DA Hike?
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.
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.
