According to media reports, the fitment factor of the salaries of government employees is likely to be revised upwards after the Union Budget 2023, thus increasing their salaries. The increase in fitment factor, which is a common value that is multiplied by the basic pay to arrive at the total pay of employees, will increase the minimum pay to Rs 26,000 from Rs 18,000 at present.
The normal fitment factor currently stands at 2.57 per cent. This means that if one gets a basic pay of Rs 15,500 in, say, 4200 grade pay, then his total pay will be Rs 15,500×2.57 or Rs 39,835. The 6th CPC recommended a fitment ratio of 1.86.
Now according to the reports, the employees are demanding the government to increase the fitment factor to 3.68. The hike will increase the minimum wage from Rs 18,000 at present to Rs 26,000.
Budget 2023 is to be presented on February 1 with the budget speech by Finance Minister Nirmala Sitharaman. The budget session of Parliament will begin on January 31.
As per earlier media reports, central government employees are also likely to get a hike in their Dearness Allowance (DA) in March 2023, with effect from January 1, under the 7th Pay Commission. The government will also increase the Dearness Relief (DR) for pensioners. Apart from this, as per reports, the employees are also likely to get DA arrears of 18 months.
Dearness Allowance (DA) and Dearness Relief (DR) are revised twice a year, with effect from 1 January and 1 July. The last hike in September, which benefitted around 48 lakh central government employees and 68 lakh pensioners, hiked DA by 4 per cent. to 38 percent. Earlier, the government had increased DA by three per cent to 34 per cent in March under the Seventh Pay Commission.
How does the government decide on the DA hike?
The government decides to increase DA on the basis of inflation rate in the country. If inflation is high, there are chances that DA will increase further. In the current scenario, retail inflation in India is above the RBI’s comfort zone of 2-6 per cent for the last 10 months. This may prompt the government to allow further hike in wages.
DA and DR hike is decided on the basis of percentage increase in 12 monthly average of all India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances every year on January 1 and July 1, the decision is generally announced in March and September.
In 2006, the central government revised the formula for calculating DA and DR for central government employees and pensioners.
House Rent Allowance Rules
The Finance Ministry recently updated the House Rent Allowance (HRA) rules for central government employees under the 7th Pay Commission and said that they will not be entitled to HRA in cases where:
(i) he/she shares the Government accommodation allotted to any other Government servant; either
(ii) He/she resides in a residence allotted to his/her parent/son/daughter by the Central Government, State Government, an Autonomous Public Sector Undertaking or a Semi-Government organization such as Municipality, Port Trust, Nationalized Banks, Life Insurance Corporation. of India, etc.; either
(iii) his/her spouse has been allotted accommodation at the same station by the Central Government/State Government/Autonomous Public Sector Undertaking/Semi-Government Organization like Municipality, Port Trust etc., whether he/she resides in that accommodation or Lives separately in rented accommodation.
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