Central government employees can expect significant pay increases starting in July. Several factors contribute to this, including an upward adjustment in the dearness allowance, a modification to the fitment factor, and an adjustment in the house rent allowance (HRA).
Following the implementation of the 7th Central Pay Commission (CPC) in 2016, the minimum wage for employees saw a substantial increase. Now, another rise in wages is on the horizon. Media sources suggest that steps are being taken to improve the fitment factor for employees, which would result in higher minimum wages.
Previously, the dearness allowance (DA) for central government personnel was determined using the Consumer Price Index (AICPI) with the base year 2001. However, in September 2020, the central government changed the base year to 2016.
Now, let's address the specific questions about the hike in DA and the salary increase.
Every January 1st and July 1st, dearness allowance (DA) and dearness relief (DR) are updated. According to recent media reports, it is likely that the government will raise the dearness allowance by an additional 4% in July of this year. Currently, the DA stands at 38% for central government employees. However, if the 4% increase is implemented, it will reach 42%.
Regarding the increase in the fitment factor, it is expected that the minimum wage for government employees will rise from Rs 18,000 to Rs 26,000 for those working under the central government. Sources suggest that the government will soon update the dearness allowance (DA) and fitment factor, although there hasn't been an official statement on this matter.
As of now, the prevailing fitment factor is 2.57. In practical terms, if a person receives a basic salary of Rs 18,000 with a 4200 Grade Pay, their total compensation would amount to Rs 46,260 (Rs 18,000 x 2.57). The 6th CPC had recommended a fitment ratio of 1.86.
Employees have requested an increase in the fitment factor to 3.68, which would raise the minimum salary to Rs 26,000 from the current level of Rs 18,000.
