DA Hike 7th Pay Commission: Central government employees and pensioners are waiting in anticipation of another hike in their dearness allowance (DA) and Dearness Relief (DR). They are expecting another DA hike especially in the scenario of latest All India Consumer Price Index (AICPI) Figures released by the government. The AICPI is a key factor in determining how much of the DA hike will be implemented, and figures for April suggest that the government may make another hike in the DA in the coming months. According to several media reports, the Center is likely to implement another DA hike for government employees On July 1, which is the following month.
How much DA hike is expected?
According to a report by Zee News, the government may consider increasing the DA by 5 percent in July. This means that if the report is to be believed, then the central government employees will get 39 percent DA. The AICPI in January and February stood at 125.1 and 125 respectively, while it rose to 126 in March. The AICPI rose to 127.7 in April, due to rising inflation. Now, if AICPI remains at that level, the DA is likely to increase by 5 per cent. CPI-based inflation stood at an eight-year high of 7.79 per cent in April.
Presently government employees get 34 per cent DA on their basic pay. If 5 per cent hike in DA is implemented, they are going to get 39 per cent dearness allowance over the basic pay. Dearness Allowance (DA) is given to government employees, while Dearness Relief (DR) is given to pensioners. The government had revised the DA in March this year, which then increased by 3 per cent to 34 per cent of an employee’s basic pay. This was done because of rising prices, and the central government increased the DA by 3 per cent to compensate for inflation. April AICPI has fueled rumors that the government may consider a 5 per cent hike in DA in July.
How is DA calculated under 7th Pay Commission?
In 2006, the central government revised the formula to calculate DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All India Consumer Price Index (Base Year 2001=100) for the last 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 last 3 months-126.33)/126.33)x100.
Will the government hike dearness allowance in July?
To reduce inflation, the government increases DA in January and July every year. Therefore, since retail inflation is at a one-year high, there is a strong possibility of a hike in dearness allowance. It is to be noted that Dearness Allowance varies from employee to employee depending on whether they work in urban area, semi-urban area or rural area.
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