7th Pay Commission: To compensate for the rising inflation, on Wednesday, the government announced that the Dearness Allowance (DA) and Dearness Relief (DR) of the Central Government employees have been raised by 3% to 34% which is double of what they used to get before July 2021.
"The Union Cabinet...has approved the release of an additional installment of DA to central government employees and DR to pensioners w.e.f. January 1, 2022, representing a 3% increase over the existing rate of 31% of the Basic Pay/Pension, to compensate for price increases," according to an official statement.
Previous DA hikes:
In October last year, the Cabinet had hiked the DA by 3 per cent to 31 per cent. It was effective from July 1, 2021.
Before that, in July, the government had restored the dearness allowance and dearness relief and increased the rate of allowance from 17 per cent to 28 per cent.
7th Pay Commission:
DA hike is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission, it added.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief will be Rs 9,544.50 crore per annum.
This will benefit about 47.68 lakh central government employees and 68.62 lakh pensioners, the release said.
What is Dearness Allowance?
Dearness Allowance is a component of government employees' and retirees' salaries that helps to balance the effects of inflation. It is important to remember that Dearness Allowance differs from employee to employee depending on whether they work in the urban, semi-urban, or rural sectors.
DA Calculation: How much will the Salary Increase?
If a central government employee gets Rs 18,000 per month. The Dearness Allowance in his salary will increase by 3 percent. With 34 percent DA, he or she will witness a jump of Rs 6,120 (18000X34/100) in the monthly salary.
It must be noted that the dearness allowance is linked to the basic salary. So, a hike in DA will also increase the monthly provident fund (PF) and gratuity amount of the central government employees.
After the revision in Dearness Allowance, the monthly contribution to Provident Fund, gratuity, Travel Allowance will also go up for the central government employees.
