7th Pay Commission: 4% DA Hike Likely For Central Govt Employees Soon. Know How Will It Impact Salary

The dearness allowance (DA) for over one crore employees and pensioners may be raised by four percentage points to 42 per cent from the existing 38 per cent

Dearness allowance is given to government employees and pensioners in order to compensate them for inflation

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The Centre may hike the dearness allowance (DA) for its over one crore employees and pensioners by four percentage points to 42 per cent from the existing 38 per cent.

DA is given to government employees and pensioners in order to compensate them for inflation. The cost of living increases over a period of time and is reflected through CPI-IW. The DA is revised periodically twice a year.

Stating the expected hike, All India Railwaymen Federation, General Secretary, Shiva Gopal Mishra said told news agency PTI last month, “The CPI-IW for December 2022 was released on January 31, 2023. The dearness allowance hike works out to be 4.23 per cent. But the government does not factor in hiking DA beyond decimal point. Thus, DA is likely to be increased by four percentage points to 42 per cent."

Also, note that the DA for employees and pensioners works out based on the latest Consumer Price Index for industrial workers (CPI-IW), released by the labour ministry every month.

Going by the latest data, the retail inflation dipped marginally to 6.44 per cent in February on account of a slight easing in prices of food and fuel items. However, it remained above the RBI's comfort level of 6 per cent for the second month in a row.

As per the data released on 13 March, the CPI-based inflation was at 6.52 per cent and 6.07 per cent in February 2022. If any change happens, then the DA hike would be effective from 1 January 2023.

As of now, one crore central government employees and pensioners are getting 38 per cent DA. the last revision on the DA hike was made on 28 September 2022 and was effective from 1 July 2022.

In case of change, the DA hike would be effective from 1 January 2023.

What will be the rise in salary?

All government employee and pensioner get dearness allowance and dearness relief. DA is calculated as a proportion of the basic salary.

Any hike in DA for central government employees will lead to increase in take-home salary. Consider an example of an employee who gets a basic salary of Rs 25,500 per month.

At 38 per cent, his dearness allowance was Rs 9,690. Now, if DA jumps to 42 per cent, the DA will also move up to Rs 10,710. After the latest hike, the salary will rise by Rs 10,710 - Rs 9,690 = Rs 1,020.

In case, of retired central government employees, they get dearness relief. With a hike in DR, central government pensioners will witness a hike in their monthly pensions. For example, a central government pension gets a basic pension of Rs 35,400 per month. At 38 per cent dearness relief, the pensioner gets Rs 13,452 but if the DR rises to 42 per cent, he will get Rs 14,868 every month. So, his pension will rise by Rs 1,416 per month.