According to media sources, central government employees under the 7th Pay Commission would likely see an increase in their dearness allowance (DA) on 25 December. Additionally, the government would increase retirees' dearness relief (DR). In addition, the employees are reportedly also expected to receive their 18-month DA arrears.
Every January 1 and July 1, dearness allowance (DA) and dearness relief (DR) are updated. The most recent increase in September increased the DA by 4% to 38%, benefiting roughly 48 lakh central government employees and 68 lakh pensioners. Prior to this, the government increased the DA under the 7th Pay Act by 3% to 34% in March.
In addition, the reports stated that the fitment factor of the wages of government employees is also expected to be raised upward, thus increasing their incomes. Employee unions have been calling for the fitting factor in their pay to be revised. A fitment factor is a standard number that is multiplied by the base pay to determine the employees' overall salaries.
The Common Fitment Benefit is currently 2.57 for all groups of central government employees. Now, if someone receives a basic salary of 15,500 rupees with a 4200-grade pay, his total income will be 15,5002.57, or 39,835.
The fitment ratio of 1.86 has been suggested by the 6th CPC. According to a media report, employees are now requesting that the government boost it to 3.68. The increase will bring the minimum salary up to Rs 26,000 from its present level of Rs 18,000.
How will the govt decide the DA Hike?
The country's inflation rates play a role in the government's decision to increase DA. High inflation increases the likelihood that the DA will be raised further. Retail inflation in India has exceeded the RBI's tolerance level of 2–6% for the past 10 months under the prevailing circumstances. This might persuade the government to approve additional pay increases.
The percentage rise in the 12-month average of the All-India Consumer Price Index (AICPI) for the period ending June 2022 is used to calculate the DA and DR hike. Despite the fact that the federal government adjusts the allowances twice a year on January 1 and July 1, the decision is often announced in March and September.
The Union Cabinet approved a 3% rise in DA under the 7th Pay Commission in March, bringing it to 34% of the basic income. The formula used by the central government to determine the DA and DR for central government employees and pensioners was changed in 2006.
