7th Pay Commission latest update: Govt may hike DA by 3% to 34%, good news likely this New Year

7th Pay Commission latest news: The Narendra Modi government may bring some more good news for the central government employees this New Year with a hike in the Dearness Allowance (DA). 

Although it has not been decided as to how much the Dearness Allowance (DA) will be increased in January 2022, but as per the data of the AICPI index, a 3 percent DA is being expected to increase. With the hike in DA, the salary of the employees is also expected to increase again.

Experts opine that the dearness allowance can be increased by 3% in January 2022, thus taking the total DA percentage from 31 percent to 34 percent. According to AICPI data, the figures till September 2021 suggest Dearness Allowance (DA) @ 32.81 percent. This figure/data will be an important component while deciding on further DA hike of 3 percent. Although there is no concrete information on government's next move, it is widely reported in the media that the DA hike is on the cards.

It may be recalled that in October this year, the Union Cabinet, chaired by the Prime Minister Narendra Modi, approved to release an additional instalment of Dearness Allowance  to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1.7.2021 representing an increase of 3% over the existing rate of 28% of the Basic Pay / Pension, to compensate for price rise.

This increase was in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.  The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.9,488.70 crore per annum.  This will benefit about 47.14 lakh Central Government employees and 68.62 lakh pensioners.

In view of the unprecedented situation which arose due to the COVID-19 pandemic, three additional instalments of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, which were due from 01.01.2020, 01.07.2020 and 01.01.2021, had been frozen.

The Government later decided to increase the Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from 01.07.2021 to 28% representing an increase of 11% over the existing rate of 17% of the Basic Pay/Pension.  The increase reflects the additional instalments arising on 01.01.2020, 01.07.2020 and 01.01.2021.  The rate of Dearness Allowance/Dearness Relief for the period 01.01.2020 to 30.06.2021 shall remain at 17%.

However, the employee organizations have been demanding the application of the revised DA from January 1, 2020.