The wait of lakh of government employees is finally over as the government has increased their Dearness Allowance (DA) by 4 per cent to 38 per cent from earlier 34 per cent, effective July 1, 2022. The decision was taken at the Cabinet Committee on Economic Affairs (CCEA) meeting headed by PM Modi in a bid to compensate for the price rise. More than 50 lakh central government employees and 62 lakh pensioners will be benefited from the current hike.
7th Pay Commission: DA increased by 4%
Union cabinet has also decided to increase Dearness Allowance (DA) by 4 per cent for central government employees and pensioners. A total burden of Rs 12,852 crore would be borne by the exchequer towards payment of these allowances for the current fiscal. For the unversed, DA is a part of an employee’s salary which is calculated as a specific percentage of the basic salary which is then added to the basic salary.
The government employees generally receive the DA hike (based on the 7th Pay Commission) announcement in the second half of this year, which usually comes around Navaratri festivals. Earlier in March, the Cabinet had hiked the dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners by 3 percent to 34 per cent from 31 per cent previously, effective January 1, 2022.
DA hiked by 4%: How is Dearness Allowance Calculated?
It is calculated as a percentage of the basic salary. For Central Government employees: Dearness Allowance percent = ((Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76) *100. AICPI stands for All India Consumer Price Index.
How much salary will increase by DA hike in 7th Pay Commission?
- If the Basic Salary/Pension is Rs 25,000, the DA/DR at 38% rate will be Rs 9500. At 34% rate, DA/DR amount is Rs 8500.
- If the Basic Salary/Pension is Rs 35,000, the DA/DR at 38% rate will be Rs 13,300. At 34% rate, DA/DR amount is Rs 11,900.
- If the Basic Salary/Pension is Rs 45,000, the DA/DR at 38% rate will be Rs 17,100. At 34% rate, DA/DR amount is Rs 15,300.
- If the Basic Salary/Pension is Rs 55,000, the DA/DR at 38% rate will be Rs 20,900. At 34% rate, DA/DR amount is Rs 18,700.
- If the Basic Salary/Pension is Rs 65,000, the DA/DR at 38% rate will be Rs 24,700. At 34% rate, DA/DR amount is Rs 22,100.