7th Pay Commission News: The Central Government 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 anticipated that the Modi government will implement a 3% hike in DA and DR this time. While DA is provided to serving government employees, pensioners receive DR.
The government typically increases DA/DR twice a year, with announcements made in March and September. However, these hikes are applied retroactively from January and July each year.
In January of this year, the government raised the DA by 4%, bringing it to 50% of the basic salary. As a result of the DA reaching 50%, other allowances also increased by up to 25%.
There have also been rumors that DA might be merged into the basic salary and reset to zero. However, the government has denied any such plans, stating that no such proposal is under consideration.
DA Hike Expected to Be 3% for July-December 2024
It is expected that there will be at least a 3% hike in DA for government employees and DR for pensioners. DA is given to serving employees in various government departments, while DR is provided to pensioners. The DA hike is calculated based on the All India Consumer Price Index (AICPI), which tracks changes in retail prices across various sectors.
How Is DA Calculated for Central Government Employees?
The DA hike was previously calculated using the Consumer Price Index with the base year 2001. However, from September 2020 onwards, the government has been using the CPI with the base year 2016.
DA Calculation Formula:
DA = (Average of CPI-IW (Base 2016=100) for the past 12 months × 2.88 – 261.4) × 100 ÷ (261.4)
From December 2023 to June 2024, the CPI-IW increased by 2.6 points, from 138.8 to 141.4. As a result, the DA percentage is likely to rise from 50.28% to 53.36%.
Let’s consider two examples to calculate the DA for serving government employees, based on minimum and maximum basic pay.
Example 1: A central government employee with a basic salary of Rs 18,000 will see their total salary increase by Rs 540 per month after the July revision, due to the 3% DA hike. This translates to an additional annual income of Rs 6,480.
With 46% DA, their monthly salary will rise to Rs 8,280. Thus, the annual benefit of this DA hike for such employees will be Rs 8,640.
Example 2: Another employee with a basic salary of Rs 56,900 will see their salary increase 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 in Parliament. Two Members of Parliament (MPs) inquired whether the government is actively considering releasing the 18 months of DA arrears owed to central government employees and pensioners, which was withheld during the COVID-19 pandemic. In response, the Centre stated that the decision to freeze three DA installments was made in light of the economic disruption caused by COVID-19, in order to alleviate pressure on government finances.
