New Delhi, Sep 28: In a good news for 10 million central government employees, Narendra Modi government is likely to hike dearness allowance (DA) by 2 per cent ahead of the Dusshera festival. Union Finance Minister Arun Jaitley will move the proposal of hike in DA on the basis of accepted formula for calculation under the 7th Pay Commission recommendation, while the Union Cabinet is expected to clear the proposal of hike in DA in the next meeting. The 7th Pay Commission recommended the merging of 125 percent dearness allowance into the basic pay. Also Read - 7th Pay Commission Latest News: Centre Takes Big Step For Railway Employees on Night Duty Allowance | Details Here

The Central government is likely to hike dearness allowance (DA) by 2 per cent, based on the data of the Consumer Price Index- Industrial Workers ( CPI-IW). “Average rate of Consumer Price Index-Industrial Labour from July 2015 to June, 2016 was 2.90 per cent. Thus, the Centre will increase dearness allowance by two as per accepted formula for calculation,” a Finance Ministry official working on the implementation of the 7th Pay Commission recommendations was quoted as saying by the Sen Times. (ALSO READ: 7th Pay Commission: Revised allowances report to be delayed till November due to India-Pakistan bilateral tensions) Also Read - 7th Pay Commission: Govt Employees Await News On DA Hike, Arrear Clearance And Other Benefits

Unlike the 6th Pay commission, which had recommended the basic pay based on the Consumer Price Index 115.76 in January 2006, 7th Pay commission recommended new pay matrix, based on the Consumer Price Index 261.42. The government will use the data of CPI-IW from July 1, 2015 to June 30, 2016. The CPI (IW) of the months July, August, September, October, November, December, January, February, March, April, May and June were 263, 264, 266, 269, 270, 269, 269, 267, 268, 271, 275 and 277 respectively. Also Read - 7th Pay Commission Latest News: Centre, States Have Big Holi Benefits For Govt Employees | Check Details Here

The Centre revised DA twice in a year on the basis of one year average of retail inflation for industrial workers as per the accepted formula. Last times, the government had increased DA by 6 percentage points from 119 to 125. The new rate of DA will be implemented from July 1, 2016. The cabinet approved the 7th Pay Commission’s recommendations for central government employees on July 29, which will impact some 47 lakh central government employees and 53 lakh pensioners.

The 7th Pay Commission notification confirmed that central government employees will get 14.27 per cent hike in basic pay at junior levels, which is the lowest in 70 years. The Cabinet also approved the increase in minimum pay Rs 18,000 from existing Rs 7,000. The 7th pay commission had recommended abolition of 51 allowances and subsuming 37 others out of 196 allowances. However no final decision has been taken on the allowances by the government. The allowances had been a major bone of contention amongst majority of the central government employees.