7th Pay Commission: Good News! Centre Likely to Hike DA for Govt Employees by 4 Per Cent

Presently over one crore central government employees and pensioners are getting 38 per cent dearness allowance

Written by: Victor Dasgupta Edited by: Victor Dasgupta

Updated: February 5, 2023, 10:39 PM IST

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https://www.india.com/business/7th-pay-commission-latest-news-budget-2023-nirmala-sitharaman-good-news-centre-likely-to-hike-da-for-govt-employees-by-4-per-cent-5884661/ Copy

Salary Hike For Bank Employees: According to the agreement, the revision in wages will cost the banks a sum of Rs 12,449 crore for all the public sector banks including the State Bank of India (SBI).

New Delhi: The Modi government is likely to hike the dearness allowance (DA) for its over one crore employees and pensioners by four percentage points to 42 per cent from existing 38 per cent as per the agreed formula for the purpose.

The dearness allowance for employees and pensioners are worked out on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month. The Labour Bureau is a wing of the Labour Ministry.

Talking to PTI, All India Railwaymen Federation, General Secretary, Shiva Gopal Mishra said, “The CPI-IW for December 2022 was released on January 31, 2023. The dearness allowance hike works out to be 4.23 per cent. But the government does not factor in hiking DA beyond decimal point. Thus DA is likely to be increased by four percentage points to 42 per cent.”

He further explained that the expenditure department of the Finance Ministry will formulate a proposal to hike DA along with its revenue implication and will put up the proposal before the Union Cabinet for approval.

Dearness allowance calculation:

For central government employees: The DA is calculated as — {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months -115.76)/115.76} x 100.

For central public sector employees, the DA is calculated as — {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 3 months -126.33)/126.33} x 100.

It is important to note that if DA is hiked to 42 per cent from 38 per cent, then employees’ dearness allowance on their salary will also jump. Notably, DA is different depending upon the level of the pay matrix of an employee.

For example:

Level 1 grade pay:

If the basic salary under level 1 of the 1800 grade pay scale for employees, is ₹15,000 per month.

With DA at 42%, the dearness allowance would come at ₹6300 on the mentioned salary (42% of 15,000 pm). At 38%, the dearness allowance comes around to ₹5700 (38% of ₹15,000 pm).

Here are some of the key details: 

• The DA hike will be effective from January 1, 2023.
• Presently over one crore central government employees and pensioners are getting 38 per cent dearness allowance.
• The last revision in DA was done on September 28, 2022, which was effective from July 1, 2022
• The Centre had increased DA by four percentage points to 38 per cent based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June, 2022.
• The DA is provided to employees and pensioners to compensate them for rising prices.
• The cost of living increases over a period of time and is reflected through CPI-IW.