All government workers and retirees get Dearness Allowance (DA), which is increased twice a year – in January and July. The increase is based on the latest Consumer Price Index for Industrial Workers (CPI-IW) from the Labor Bureau under the Ministry of Labor.
Expected DA: The 7th Pay Commission ensures fair pay for government employees and suggests changes to allowances like housing, travel, and medical benefits. It uses the Aykroyd formula to figure out salaries, considering how the cost of living is affected by price changes in essential products. The Commission also looks into and suggests changes to pension calculations.
Expected DA: Moreover, the Commission proposed a fresh Pay Matrix system, providing government workers with clarity on their career progress and expected earnings. This aims to enhance transparency in the pay structure, minimizing confusion about levels and salary calculations. Additionally, the Commission aimed to increase the minimum monthly wage for government employees from the existing Rs. 18,000.
Expected DA DR from Jan 2024 50%
The Dearness Allowance (DA) is a percentage of the basic salary, adjusted annually to counter inflation. The Centre recently approved a 4% hike in DA for central government employees, aiming to boost their salaries in the face of rising prices. This increase, based on the Industrial Workers’ Consumer Price Index (CPI-IW), will impact over 48 lakh employees and 67 lakh pensioners, providing a much-needed raise and releasing arrears for July to October.
Expected DA: It’s the first DA increase under the 7th pay commission, offering relief to those affected by high inflation. Additionally, the hike will lead to increased pensions for retired central government employees and raise the Fitment Factor used to calculate total compensation.
How much increment do central government employees get?
The Central government has declared a salary hike for its employees, providing relief amid growing inflation concerns. This increase in Dearness Allowance (DA) is beneficial for retirees as well, as it contributes to their monthly pensions. The 4% DA rise is expected to enhance the take-home pay of both current employees and pensioners, with the impact likely seen in October or November payments.
Expected DA: The calculation of this DA increase is based on the Consumer Price Index for Industrial Workers (CPI-IW) from the Labour Bureau under the Ministry of Labour and Employment, revised twice a year in January and July.
The Dearness Allowance (DA) is calculated as a percentage of the employee’s basic salary, resulting in a higher take-home pay whenever the DA is raised. With the existing 42% DA rate, someone earning a basic salary of Rs 18,000 would receive Rs 7,560 monthly. With a 46% DA, their monthly income would rise to Rs 8,280. The elevation of DA will assist the government in addressing inflationary challenges and meeting its fiscal goals.
18 months DA How Much DA Arrears Will Central Govt Employees Get?
To counter the rising cost of living, the government uses Dearness Allowance (DA) to compensate employees, revising it biannually in January and July based on the Industrial Workers’ Consumer Price Index (CPI). With a 3.24 percent increase in the CPI for June 2023 and an expected rise in July, a 4 percent DA increase is likely.
This increase will benefit around one billion central government employees and retirees considered a long-awaited Diwali gift from the government. According to Shiv Gopal Mishra from the National Council of JCM, Staff side, DA arrears for a Level-1 employee will range from Rs 11,880 to Rs 37,554. For Level-13 and Level-14 employees, the DA arrears will vary from Rs 1,44,200 to Rs 2,18,200.
How to calculate DA in salary for state government employees
The increase in DA and DR is determined by the percentage increase in the 12-month moving average of the All India Consumer Price Index (AICPI) till June 2022. Even though the central Government revises the allowance annually on January 1 and July 1. The decision is usually made in March and September.
- Dearness Allowance Percentage: ((Average All India Consumer Price Index (Base Year 2001=100) – 115.76)/115.76) x 100.
- For Central Government employees: Dearness Allowance Percentage = ((Average All India Consumer Price Index (Base Year 2001=100) – 126.33)/126.33) x 100.