Union Minister Anurag Thakur on Friday announced that there will be a 4% hike in the dearness allowance (DA) for Central government employees and dearness relief (DR) for pensioners of the central government. This hike brings the current DA to 42%, in line with the recommendations of the 7th Central Pay Commission.
This move is expected to benefit around 47.58 lakh employees and 69.76 lakh pensioners who will receive the increased allowance and relief.
The updated rate of 42% for Dearness Allowance (DA) will be paid with the salary for the month of March, along with arrears for the months of January and February. Union Minister Anurag Thakur informed the media that, the combined impact on the exchequer due to the hike in both Dearness Allowance and Dearness Relief will be around ₹12,815.60 crore per annum.
Earlier this month, individuals covered under the Employees' Pension Scheme 1995 had planned a nationwide protest across 200 cities, including the national capital, to demand higher benefits. The pensioners had requested a 7,500 monthly stipend in addition to medical care for themselves and their wives, a daily allowance, and other benefits.
How much will central government employees' salaries rise with a 4% DA increase?
A 4% hike in Dearness Allowance (DA) is expected to increase the take-home salary of central government employees. The exact amount of the increase will depend on the employee's basic salary and the current DA rate they are receiving.
For instance, let's consider a central government employee receiving a basic salary of Rs. 25,500 per month and previously getting a DA rate of 38%. As per the latest DA hike of 4%, their DA amount will increase from Rs. 9,690 to Rs. 10,710 per month. Therefore, the employee's salary will increase by Rs. 1,020, which is the difference between the old and new DA amounts.
The Labour Bureau, which is a wing of the Labour Ministry, publishes the Consumer Price Index for Industrial Workers (CPI-IW) every month, and it serves as the basis for determining the Dearness Allowance (DA) applicable to central government employees.
The 7th Central Pay Commission calculates the Dearness Allowance (DA) percentage for central government employees based on the average All India Consumer Price Index for Industrial Workers (AICPI-IW) of the previous 12 months, with the base year being 2001=100.