The union cabinet today cleared a 3% increase in Dearness Allowance (DA) for the central government employees and pensioners. The DA, which currently stands at 42% of the Basic Pay payable, goes up to 45% of the Basic Pay payable effective from July 1, 2024, or just ahead of Diwali.
Cheerful News: Just ahead of Diwali, the Union Cabinet, led by PM Narendra Modi, declared it had sanctioned a 3% hike in Dear Allowance for central government employees and pensioners. Over 10 lakh people would stand to gain from this move. The DA will go up from 50 per cent of the basic salary to 53, with July 1, 2024, marking the date of amendment and coincidentally falling in the months of July, August, and September.
An employee on a Rs 18,000 per month would get additional take-home pay of Rs 540. The fact that DA is announced bi-annually, and it had been two months since the previous hike, was something that drew the attention of the employees’ unions who brought the issue to the notice of Finance Minister Nirmala Sitharaman.
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The hike in DA has been worked out by using the AICPI and, essentially, it will be used as an inflationary protective cover. This can thus ease the financial pressure on employees and pensioners.
Pensioners To Benefit From Dearness Relief
As serving employees get a 4% DA, pensioners would suffer the consequent 3% increase in DR as it is arithmetic progression with DA. The last 4% hike was effective from February 2024, though announced in March. DA and DR are now at 50% of the basic pay and pensions.
Financial Implication For 1.15 Crore People
The new hike will benefit approximately 1.15 lakh central government employees and pensioners, thus helping offset costs in living. DA is an integral part of salaries since it is revised every time so that the employees can maintain their purchasing power with the help of price reduction.
Formula for Calculation of DA under 7th Pay Commission:
The DA is calculated on the basis of the Consumer Price Index for Industrial Workers (CPI-IW) published monthly by the Labour Department of the Ministry of Labour. Calculation method of DA under Pay Commission:
7th CPC DA% = {(Average of AICPI-IW for last 12 months (Base Year 2001=100)- 261.42)/261.42 x 100. Normally, any increase in DA or DR has the retrospective effect from 1 January and 1 July of each year. This July round of increase has come in advance of the festive season to siphon off the sting of inflation from the hard-earned purse of employees and pensioners.
