The central government (CG) on Wednesday (18th October) approved a 4% hike in dearness allowance (DA). With that, DA and relief being paid to central government employees will be 46 per cent from the earlier 42 per cent. The DA hike will be applicable from July 1, 2023.
Along with the DA hike, the Cabinet has also approved Productivity Linked Bonus (PLB) for railways employees, which is equivalent to 78 days of pay.
The hiked DA rates will be given to the central government employees with their October salaries. Since the new DA hike will be counted from July onwards, employees will get arrears for July, August, and September, with their October salaries. As many as 48 lakh central government employees and 65 lakh pensioners will benefit from this hike.
The government will have to spend an additional Rs 17,000 crore to cover the expenses of the increased DA percentage.
How was 4% DA calculated?
Dearness Allowance (DA) of central employees is determined by the Consumer Price Index of Industrial Workers (AICPI-IW). The formula for calculating DA is fixed.
7th CPC DA% = [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42x100]=[{382.32-261.42}/261.42x100]= 46.24
It is clear from the calculation that dearness allowance has increased by 4 per cent.
Dearness allowance will be 46%
According to 7th Pay Commission, the average of AICPI-IW for the last 12 months was 382.32.
According to the formula, the total dearness allowance became 46.24 per cent.
The DA increased by 4.24 per cent (46.24 per cent-42 per cent) from July 1, 2023. However, the government does not pay in decimals, hence dearness allowance has increased by 4 per cent.
