HomeIndiaDA Hike update: Good news likely for govt employees as govt may...

DA Hike update: Good news likely for govt employees as govt may raise DA by 4% under 7th pay commission

DA and DR are revised on the basis of retail inflation-industrial workers. After remaining high for the past few months, the retail inflation for industrial workers stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower prices food and fuel.

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The government is likely to give a go-ahead to a 4 per cent hike in dearness allowance (DA). The decision might be taken in the Union Cabinet meeting on Wednesday (September 28), according to media reports. The 4 per cent hike, if approved, will take the DA to 38 per cent.

DA and DR are revised on the basis of retail inflation-industrial workers. After remaining high for the past few months, the retail inflation for industrial workers stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower prices food and fuel. The all-India CPI-IW (consumer price index for industrial workers) for June 2022 witnessed an increase by 0.2 points and came in at 129.2 points. The CPI-IW in May was 129 points.

The Union Cabinet in March 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.

“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.

Over 50 lakh government employees and 65 lakh pensioners get benefitted from the DA hike.

In view of the unprecedented situation which arose due to the COVID-19 pandemic, the central government also had held back three instalments of DA and DR for January 1, 2020; July 1, 2020; and January 1, 2021. Finance Minister Nirmala Sitharaman has said the holding back of DA and DR saved about Rs 34,402 crore, in a written reply to a query in the Rajya Sabha in August last year.

Dearness allowance (DA) is given to government employees, while the dearness relief (DR) is for pensioners.

How is DA under 7th Pay Commission Calculated?

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.

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