The central government has raised the dearness allowance (DA) by 4%, which will result in an increase in the salaries of government employees. The hike is in line with the inflation rate in the country, and the government has approved the release of an additional instalment of DA and dearness relief (DR) to central government employees and pensioners from January 1, 2023.
How much will the salary increase?
The 4% hike in DA and DR will increase the salary of 47.58 lakh central government employees and the pension amount for 69.76 lakh pensioners. The DA is based on the employee's basic pay, while the DR is based on their basic pension.
For example, if a government employee's monthly take-home salary is around Rs. 42,000, with a basic pay of Rs. 25,500, they currently receive Rs. 9,690 as DA. After the 4% hike, their DA will increase to Rs. 10,710, resulting in a monthly take-home salary increase of Rs. 1,020.
The DA and DR hike will become effective from January 1, 2023, and are revised twice a year in January and July. The decision to revise DA and DR is based on a formula that considers the All-India Consumer Price Index (Base Year 2001=100) for the past 12 months.
According to the formula, the DA percentage is calculated to be 42.37%, resulting in the Union government increasing the DA to 42%. The increase is in accordance with the recommendations of the 7th Central Pay Commission.
The combined impact of DA and DR on the exchequer is estimated to be Rs. 12,815.60 crores per annum. The last revision in DA was effective from July 1, 2022, and the Centre had increased it by 4 percentage points to 38%.
The Union Cabinet chaired by the Prime Minister has approved the release of an additional instalment of DA to central government employees and DR to pensioners from January 1, 2023.
