The Central government employees, who have been eagerly anticipating an increase in their dearness allowance (DA), are in for some good news. The latest update suggests that the Central government is likely to announce a 3% hike in DA in the third week of September 2023. This news is expected to bring relief and joy to the employees.
According to an official from the Ministry of Finance, this DA hike, once announced, will be effective from July 1, 2023. The decision to grant only a 3% increase in DA this time is attributed to the gradual stabilization of inflation rates and price levels. As the government has managed to curb the rise in prices over recent months, the employees can anticipate a 3% DA hike, bringing the total DA to 45%.
Presently, more than one crore Central government employees and pensioners are receiving a 42% dearness allowance. It’s essential to note that while DA is provided to government employees, dearness relief is given to pensioners. These allowances are typically adjusted twice a year, in January and July.
The last time DA was increased was in March 2023 when the Union Cabinet approved a 4% hike, raising it from 38% to 42% of the Basic Pay/Pension. The decision was made to help offset the impact of rising prices.
The calculation of DA is based on the Consumer Price Index for Industrial Workers (CPI-IW) data, which is published monthly by the Labour Bureau. The Department of Expenditure under the Ministry of Finance uses this data to compute the DA for both employees and pensioners. The latest available data, as of July 2023, shows that the All-India CPI-IW increased by 3.3 points to reach 139.7.
It’s worth mentioning that the formula for calculating DA and DR for Central government employees and pensioners was revised in 2006. In addition to this, several state governments, including Madhya Pradesh, Odisha, Karnataka, Jharkhand, and Himachal Pradesh, have also raised dearness allowance for their state government employees in recent times.