Central employees are eagerly awaiting the announcement of a likely increase in dearness allowance (DA) by the Central Government as October approaches. This anticipation is heightened by the impending festive season, promising added joy. Normally, DA revisions occur in January and July, but a delay has occurred this time. As September comes to an end, the announcement is imminent, leaving central employees wondering about the extent of the increase they can expect. This delay has only fueled their curiosity, and they are advised to stay tuned for updates regarding the awaited DA raise, which is expected to be disclosed soon.
How DA Is Calculated
The Dearness Allowance (DA) for central government employees is determined based on the latest Consumer Price Index for Industrial Workers (CPI-IW), using a fixed formula. According to the 7th CPC formula, the current DA stands at 42%, effective from January 1, 2023, calculated as follows: [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100] = [{382.32-261.42}/261.42×100] = 46.24%. This means there's a projected increase of 4.24% in DA from July 1, 2023. However, government payments do not account for decimal points, so the anticipated DA increase in October will likely be rounded down to 4%.
What Happens When DA Is Increased?
Dearness Allowance (DA) is a component of the basic salary for central government employees and serves as a means of inflation relief for government pensioners. Consequently, when DA rises, it results in an increase in the salaries of central government employees. For instance, if an employee's monthly basic salary is Rs 36,500, with a 42% DA, they would receive Rs 15,330. However, following a 4% increase, the DA will become 46%, resulting in a monthly income of Rs 16,790. In this scenario, the total income of the central employee will witness a boost of Rs 1,460 per month, calculated as Rs 16,790 - Rs 15,330.
If DA Increases, Arrears Will Also Be Paid
Once the Central Government announces it, the Dearness Allowance (DA) will be put into effect starting from July 1, 2023. If the DA announcement occurs in October, it will not only impact employees' ongoing salaries but also involve retroactive payments. These arrears will encompass the months of July, August, and September. Pensioners, too, will benefit as dearness relief is raised in tandem with the DA increase. Consequently, pensioners can expect an additional 4% payment and will receive retroactive pension arrears dating back to July.
When can We Expect DA Hike?
The Central Government is poised to unveil an announcement regarding the dearness allowance shortly. Previously, the announcement for implementing the dearness allowance from January 1 was made on March 24, 2023. Likewise, the increase in dearness allowance from July 1 2022 was officially announced on September 28. Given this trend, it is expected that the announcement for the upcoming dearness allowance may come by the end of September.
It's possible that the government might choose to announce a DA hike in October, coinciding with the commencement of Navratri on October 15. If approved, this decision will directly benefit over 1 crore employees and pensioners.
