Central government employees are expected to get a hike in their salary next month as the Centre is likely to raise the dearness allowance (DA) by 3 per cent, according to media report. The DA is expected to increase as inflation remains high for a few months. The DA is revised twice a year — January and July.
As the DA is revised based on the changes in the All India Consumer Price Index (AICPI), the chances of government employees getting a raise in dearness allowance are high. This is because the retail inflation in India during June stood at 7.01 per cent, which is above the RBI’s comfort level of 2-6 per cent.
In March, the central government had approved to increase 3 per cent in dearness allowance (DA) under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income. Over 50 lakh government employees and 65 lakh pensioners are getting profit from this move.
“The Union Cabinet chaired by the Prime Minister, Narendra Modi, has given its approval to release an additional instalment of dearness allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f. January 1, 2022, representing an increase of 3 per cent over the existing rate of 31 per cent of the basic pay/ pension, to compensate for price rise,” the Prime Minister’s Office had said in a statement.
After another three per cent hike, the DA will rise to 37 per cent. Dearness allowance is given to government employees, while the dearness relief is for pensioners.
This apart, the employees may also get the payment of an 18-month DA arrear. The issue of 18-month DA arrears payment from January 2020 to June 2021 may be addressed soon and the employees of the central government may also receive Rs 2 lakh in pending arrears in one go, according to media reports recently.
How Govt Calculates DA under 7th Pay Commission?
The Centre in 2006 had revised the formula to calculate the DA and dearness relief (DR) for central government employees and pensioners.
A dearness allowance (DA) is a sum paid to government employees and pensioners to offset the rising inflation in the country. As inflation rate varies across the country depending on the location, the dearness allowance is calculated accordingly. These locations can be broadly classified into urban, semi-urban and rural areas. The amount of DA arrears is decided by the employees’ pay band and structure.
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.
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