7th Pay Commission: Central Government Gears Up to Hike DA by 4% Ahead of Diwali
October 13, 2023: The 7th Pay Commission has recently been in the spotlight as the central government hints at a possible Dearness Allowance (DA) hike. According to multiple media reports, the government is poised to announce a 4% increase in DA for central government employees and Dearness Relief (DR) for pensioners under the 7th Pay Commission soon.
While initial expectations were for this announcement to be made prior to Dussehra, newer reports indicate the announcement might coincide with the Diwali festivities. This hike could raise the existing DA from 42% to a potential 46%. Nevertheless, the final call on this remains at the government’s discretion and is yet to receive formal approval.
What Does This Mean for Employees and Pensioners?
Should the 4% DA hike come to fruition, the effect will be observed in the salaries from November, reflecting arrears for the period between July and October. This potential hike is anticipated to benefit a vast demographic of 47 lakh employees and 68 lakh pensioners.
For those unfamiliar, Dearness Allowance (DA) acts as a cost-of-living adjustment provided to public sector employees. Its counterpart, Dearness Relief (DR), offers similar benefits to central government pensioners. The primary aim behind DA and DR is to mitigate the impact of inflation, and thus, the government revises the DA/DR rate biannually.
Understanding the Financial Impact
DA is determined via the Consumer Price Index for Industrial Workers, a figure that the Labour Bureau releases monthly. For employees receiving a basic salary of Rs 18,000, the current 42% DA results in a monthly increment of Rs 7,560. A rise to 46% would mean a monthly bump of Rs 8,280, amounting to an annual increase of Rs 8,640.
On the other end of the spectrum, those with a basic salary of Rs 56,900 currently see an addition of Rs 23,898 to their monthly pay due to the 42% DA. With the proposed 46%, this would surge to Rs 26,174 monthly, making for a yearly hike of Rs 27,312.
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Awaiting Official Confirmation
Amid the festive cheer, the central government’s announcement on the revised DA and DR under the 7th Pay Commission is eagerly awaited. While no official communication has been relayed yet, there’s palpable anticipation that the much-discussed hike may be unveiled this October.
To provide a deeper understanding: DA’s calculation is anchored on a set formula. Specifically, the Dearness Allowance percent is derived from: ((Average of AICPI (Base Year 2001=100) for the past 12 months – 115.76) / 115.76) * 100.
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