7th Pay Commission: The central government is likely to announce the latest DA hike by the end of this month, according to media reports. The hike in dearness allowance, which will be effective from July 1, 2023, is expected to be 3 per cent to reach 45 per cent. In the latest development, the Himachal Pradesh government has also hiked DA by 3 per cent for the employees of the Forest Corporation from January 1, 2022.
The dearness allowance for employees and pensioners is worked out on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month. The Labour Bureau is a wing of the Labour Ministry.
According to the latest data, the All-India CPI-IW for July 2023 rose 3.3 points to 139.7. On 1-month percentage change, it increased by 2.42 per cent with respect to previous month compared to increase of 0.90 per cent recorded between corresponding months a year ago.
Going by the media reports of a 3 per cent DA hike, here’s the estimated salary hike of central government employees. If somebody’s salary is Rs 50,000 per month and has Rs 15,000 as the basic pay. He or she currently gets Rs 6,300 as dearness allowance, which is 42 per cent of the basic pay. However, after the expected 3 per cent hike, the DA will increase to Rs 6,750 per month, which is Rs 450 higher than earlier. 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 450 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.
Last month, All India Railwaymen Federation General Secretary Shiva Gopal Mishra told news agency PTI that the Federation is demanding a four percentage point hike in dearness allowance. But, the dearness allowance hike works out to be a little over three percentage points. “DA is likely to be increased by three percentage points to 45 per cent.”
He also said the expenditure department of the finance ministry will formulate a proposal to hike DA along with its revenue implication and will put up the proposal before the Union Cabinet for approval.
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 Government 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.