DA Hike: The government will soon give central personnel a New Year’s gift. According to media sources, the Central Government may raise Dearness Allowance (DA) by 4% for a six-month period beginning January 1, 2024. According to reports, it could be announced in March 2024. The AICPI index has risen to 139.1 percent.
Central Government Responds to Rising Prices
the face of rising prices, central government employees’ dearness allowance may be increased. If the government announces a 4% DA rise, dearness allowance will approach 50%. The government increased dearness allowance by 4% to 46% with effect from July 1, 2023 in the most recent DA increase in October.
Understanding Dearness Allowance (DA)
Dearness allowance is money paid to employees as part of their wage to compensate for increases in economic prices. When inflation rises, the purchasing power of money falls. That is, it has an impact on employees’ purchasing power. Pensioners are given money as dearness relief. When the DR rises, so does the monthly pension of the retirees.
DA Calculation Demystified
DA is calculated as a percentage of basic wage, whereas DR is calculated as a percentage of pension amount. Despite the fact that the federal government revises the allowances every year on January 1 and July 1, the decision is usually published in March and September.
Central Government’s 2006 Update to DA and DR Calculation
The Central Government updated the mechanism for calculating DA and DR for Central Government employees and retirees in 2006. The government now bases DA on a percentage rise in the 12-month average of the All India Consumer Price Index (AICPI) for the fiscal year ending June 2022. Approximately 48.67 lakh central government employees and 67.95 lakh pensioners will benefit from the DA rise. The annual impact of DA and DR on the government exchequer will be Rs 12,857 crore.
Anticipating Pay Rise
If the government announces a 4% increase in DA, central government employees’ pay will rise. For example, suppose someone’s monthly pay is Rs 50,000 and his basic salary is Rs 15,000. He currently receives Rs 6,300, or 42 percent of the base income. However, following the 4% rise, the employee will receive Rs 6,900 per month. This is Rs 600 more than the previous offer of Rs 6,300.
Recent Government Move
The government boosted dearness allowance and dearness relief by 4 percent to 42 percent in the most recent DA hike in March 2023. Several state governments, notably Madhya Pradesh, Odisha, Karnataka, Jharkhand, and Himachal Pradesh, have recently enhanced the dearness allowance for state employees.
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