7th Pay Commission: Govt may hike DA in second half of 2022; Know when it will be implemented

New Delhi: The Reserve Bank of India maintained its inflation prediction for the current fiscal year 2022-23 at 6.7%. According to the monetary policy statement, "the inflation projection is maintained at 6.7 percent in 2022-23, with Q2 at 7.1%, Q3 at 6.4%, and Q4 at 5.8 percent, with risks evenly balanced." CPI inflation is expected to be 5.0 percent in Q1:2023-24." With inflation rates remaining unchanged, central government employees should anticipate a DA increase in the following months. According to reports, the government may raise DA and DR by up to 4%. Retail inflation is used to modify DA and DR.

The AICPI was 125.1 in January and February, and 125 in March, before rising to 126 in March. The April AICPI jumped to 127.7 due to rising inflation. AICPI increased significantly to 129 in May. If the AICPI maintains at that level, a 4% increase in DA is probable. In April, CPI-based inflation reached an eight-year high of 7.79%. However, it fell to 7.01 percent in June.

Currently, government employees receive a 34% DA on their basic wage. If the 4% DA increase is enacted, they will receive a 38% dearness allowance on top of their base wage. Dearness allowance (DA) is paid to government employees, whilst dearness relief (DR) is paid to retirees. In March of this year, the government updated the DA, which then increased by 3% to 34% of an employee's basic wage. This was done in response to rising costs, and the central government increased DA by 3% to compensate for the inflation rate. The April AICPI has fueled speculation that the government may adopt a 4% DA increase in 2015.

According to the department of expenditure's announcement, if an employee's basic pay is Rs 18,000, he or she will receive a Dearness Allowance of Rs 6,120 following the April raise. Previously, the employee received Rs 5,580 in DA at a rate of 31%. This means that the last DA hike resulted in a Rs 540 increase. If the DA is increased by another 5%, the DA will be Rs 7,020 if the employee receives 39% DA on a basic salary of Rs 18,000. This means that if the 5% DA increase is applied, the salary will rise by Rs 900.