Central employees are eagerly awaiting the announcement of a possible increase in Dearness Allowance (DA) by the central government as October approaches. This anticipation is heightened by the upcoming festive season, which promises more merriment. Normally, DA revision takes place in January and July, but this time there has been a delay. As September draws to a close, the announcement is imminent, leaving central employees wondering what kind of raise they can expect. This delay has only fueled their curiosity, and they are advised to stay in touch for updates on the pending DA increase, which is expected to be revealed soon.
How is DA calculated?
Dearness Allowance (DA) for Central Government employees is determined on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) using a fixed formula. According to the 7th CPC formula, the current DA is 42%, effective from January 1, 2023, calculated as follows: [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100] = [{382.32-261.42}/261.42×100] = 46.24%. This means there is an expected increase of 4.24% in DA from 1st July 2023. However, government disbursements are not accounted for by decimal points, so the expected DA in October is likely to increase by 4%.
What happens when DA is increased?
Dearness Allowance (DA) is a component of basic pay for central government employees and is a means of inflation relief for government pensioners. Consequently, when DA increases, it results in an increase in the salaries of central government employees. For example, if an employee’s monthly basic pay is Rs 36,500, with 42% DA, he will receive Rs 15,330. However, after a 4% increase, the DA will be 46%, resulting in a monthly income of Rs 16,790. In this scenario, the central employee’s total income would increase by Rs 1,460 per month, which is calculated as Rs 16,790 – Rs 15,330.
If the DA increases, the arrears will also be paid.
As announced by the Central Government, Dearness Allowance (DA) will be implemented from 1 July 2023. If the DA is announced in October, it will not only affect the ongoing salaries of the employees but will also include retroactive payments. These arrears will cover the months of July, August and September. Pensioners will also benefit as inflation relief has been extended with the increase in DA. As a result, pensioners can expect to pay an additional 4% and receive pension arrears prior to July.
When can we expect an increase in DA?
The central government is all set to announce the dearness allowance soon. Earlier, it was announced on March 24, 2023 to implement dearness allowance from January 1. Similarly, the hike in dearness allowance from July 1, 2022 was officially announced on September 28. Looking at this trend, it is expected that the announcement of increase in dearness allowance may be received by the end of September.
It is possible that the government will announce the DA hike in October with the beginning of Navratri on October 15.
First Published: 25 Sep 2023, 16:24 IST