DA Hike: For central government employees who have been anxiously awaiting the announcement of the (DA) or Dearness Relief (DR) hike, there is some good news in store! The raise in DA/DR for central government personnel is expected to be announced in a few weeks, most likely within the month of October itself, if sources are to be believed. Since the Central Government announced the DA raise for H1 in March, plans for the second half’s announcement have been in the works. On March 24, 2023, Union Minister Anurag Thakur announced a 4% increase in the dearness allowance (DA), bringing the percentage from 38% to 42%.
Anticipated 4% Increase in Dearness Allowance for Central Government Employees
Employees of the central government are currently paid a 42 percent dearness allowance (DA) or dearness relief (DR). According to reports, the Central Government will also probably announce a 4% increase in the DA around Dussehra or Vijaya Dashami on Tuesday, October 24, or at the latest by the Diwali holiday on Sunday, November 12, 2023. The arrears from July 2023 forward will also be paid out concurrently with the October salary (if announced on Dussehra) or the November salary (if the DA/DR increase announcement is made around Diwali), in light of the upcoming announcement of the DA raise for Central Government employees. The arrear payment will be made based on the published percentage hike; for instance, a 4% arrear payment will be made if a 4% DA hike is declared.
DA Calculation Based on Rising CPI-IW Index Points to Potential 4% Hike
The Consumer Price Index Numbers For Industrial Workers (CPI-IW index) for the corresponding months are used to calculate Dearness Allowance. According to reports, the rise in the index over the past few months suggests that the Central Government employees should expect a DA hike of 4% in October of this year (strictly subject to notification).
7th Pay Commission Estimates a 4% DA Increase
According to estimations made by the 7th Pay Commission, the dearness allowance that will be in effect starting on July 1, 2023, might rise by 4%. Even if the CPI-IW index numbers do not change in the next reviews, experts predict that inflation statistics of over 6% will cause the dearness allowance to increase to 46%.
Calculation of Dearness Allowance Relies on Monthly CPI-IW Index
The Consumer Price Index Numbers for Industrial Workers are released by the Ministry of Labour & Employment’s Labour Bureau on the last working day of the following month. After gathering information on retail pricing from 317 markets in 88 industrially significant Indian cities, the To Labour Bureau determines the index number.
Understanding the Formula for Dearness Allowance Calculation
The formula used to determine the dearness allowance for central government employees is [(Average of All India Consumer Price Index (AICPI) for the last 12 months – 115.76)/115.76]100 is the Dearness Allowance Formula.
Dearness Allowance Calculation for PSU Employees
The formula used to determine the Dearness Allowance for employees of PSUs (Public Sector Units) is [Average of Consumer Price Index for the last 3 months (Base Year 2001 = 100)-126.33] x100
Biannual Adjustment of Dearness Allowance (DA) for Central Government Employees and Retirees
Employees and retirees of the central government are given a dearness allowance to make up for price increases. The CPI-IW measures how the cost of living has increased over time, and with this in mind, the dearness allowance or dearness relief is routinely amended twice a year.
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