New Delhi: Central government employees are eagerly awaiting the announcement of a Dearness Allowance (DA) hike, which is expected to be made in October. Although the Centre has not yet made an official announcement, sources suggest that the hike will be revealed before Diwali. Last year, the DA hike was announced in the first week of October.
Expected DA Hike Details
According to sources, the government is likely to announce a 3-4% DA hike. This increase will be effective from July 1, 2024. For an entry-level central government employee with a basic salary of around ₹18,000 per month, this hike will translate to an increase of ₹540-720 per month.
7th Pay Commission DA Hike: Salary Impact
For employees earning ₹30,000 per month with a basic pay of ₹18,000, the current DA is ₹9,000, which is 50% of the basic pay. With a 3% hike, the DA will increase to ₹9,540, adding ₹540 to the monthly salary. If the hike is 4%, the DA will rise to ₹9,720, resulting in an additional ₹720 per month.
DA and DR: Twice-Yearly Adjustments
Dearness Allowance (DA) is provided to government employees, while Dearness Relief (DR) is given to pensioners. Both DA and DR are revised twice a year, in January and July. Currently, over one crore central government employees and pensioners receive a 50% dearness allowance.
Recent DA Hike
In March 2024, the central government raised the DA by 4%, bringing it to 50% of the basic pay. The DR was also increased by 4%.
How the Government Decides on DA Hikes
The DA and DR hikes are based on the percentage increase in the 12-month average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Although the central government revises these allowances on January 1 and July 1 each year, the decisions are typically announced in March and September.
Formula for Calculating DA
In 2006, the central government revised the formula for calculating DA and DR:
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
8th Pay Commission Update
Pay commissions are typically constituted every 10 years. The 7th Pay Commission was formed in February 2014, and its recommendations were implemented from January 1, 2016. The implementation will complete 10 years by the end of next year.
Government’s Stance on the 8th Pay Commission
In July, the Confederation of Central Govt Employees and Workers made several demands, including the immediate constitution of the 8th Pay Commission and the restoration of the old pension scheme. However, the 8th Pay Commission was not announced in the Union Budget 2024-25. On July 30, 2024, Minister of State for Finance Pankaj Chaudhary stated in the Rajya Sabha that no proposal for the 8th Pay Commission is currently under consideration.
Projected Salary Increase with the 8th Pay Commission
Reports suggest that the minimum salary for central government employees could increase to ₹34,560 with a fitment factor of 1.92, compared to the current minimum salary of ₹18,000.
