7th Pay Commission: There's a good news for Central government employees as Narendra Modi-led government is expected to announce Dearness Allowance hike by 4 per cent. According to media reports, there is speculation by the various employees' unions that the government may announce 4 per cent Dearness Allowance (DA) for the central government employees soon.
According to Zee Business report, if the Centre announced the DA hike of 4 per cent, the monthly salary of central government employees' will go up by Rs 720 to Rs 10,000 per month. The report states that this speculation in DA hike is based upon the rise in inflation from July 2019 to December 2019.
Earlier, the Central Government has announced the inflation data from July 2019 to October 2019 and on the basis of inflation data, speculation for the increase in DA has gained fuel from the central government employees as their next Dearness Allowance hike will become due from January 2020.
To be noted, DA is announced twice in a year and its tenor is January to June and July to December every year. The July 2019 to October 2019 inflation data suggests that there is 3 point rise in inflation.
Speaking to Zee Business, Harishankar Tiwari, Former president at AG Brotherhood said, "If the AICPI (All India Consumer Price Index) remains at 325 in November and December 2019, then in January 2020 the DA would go above 21 per cent. Currently, the DA rate is 17 per cent only. That's why there is speculation about 4 per cent DA hike for central government employees."
What is Dearness Allowance (DA)
Dearness Allowance (DA) is basically a component of salary paid to government employees (Central and State). Dearness Allowance is a cost of living adjustment allowance paid to government employees and pensioners linked to the Consumer Price Index to offset the impact of inflation. DA is fully taxable.
DA is decided on the basis of the city. It varies depending on the employee's office location. DA will be more for the employees in the urban area. While for semi-urban areas and villages DA will be less.
Seventh Pay Commission is an administrative system that is set up by the Government of India to determine the salaries of government employees. It benefits per 1 crore central government employees, including around 53 lakh pensioners.