7th Pay Commission: Will Centre Announce Dearness Allowance Increase For Govt Employees Today? All Eyes On Union Cabinet Meeting

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New Delhi: The central government is likely to bring good news for its employees and pensioners with an expected hike in Dearness Allowance (DA) and Dearness Relief (DR) after the upcoming Cabinet meeting on Wednesday, according to reports. While DA benefits are for serving employees, pensioners receive DR.  These allowances are typically revised twice a year, in January and July, with announcements made later.

In March, the government announced a 4 per cent increase in DA, effective from January 2024. Currently, both central government employees and pensioners receive 50 per cent of their basic salary or pension as DA and DR, respectively.

The Union Cabinet, led by Prime Minister Narendra Modi is expected to meet today where a decision on further increasing the DA may be made, though no official confirmation has been given yet. If the DA and DR hike is announced, it will benefit around 1.15 crore central government employees and pensioners. It will also offer much-needed financial relief as living costs continue to rise.

What is DA?

Dearness Allowance (DA) is a portion of an employee's basic salary which is provided to help offset the impact of inflation. It’s adjusted every six months to keep up with the rising cost of living, giving government employees some relief from increasing prices.

DA for central government employees is calculated as follows:

Dearness Allowance (DA) hikes are based on the average All India Consumer Price Index (CPI-IW) for industrial workers, which reflects changes in the cost of living. Typically, these revisions happen twice a year, on January 1 and July 1.

The DA for central government employees is calculated using this formula: DA% = [(12-month average of AICPI (Base Year 2001 = 100) – 115.76) / 115.76] x 100.

This calculation helps determine how much of a DA increase employees will receive, based on inflation trends.