The government is poised to increase the Dearness Allowance (DA) for central government employees by 4% in March, which will elevate the DA and Dearness Relief (DR) to over 50%. This adjustment is calculated based on the Consumer Price Index (CPI) data for industrial workers, with a 12-month average of 392.83, resulting in a DA of 50.26% of basic pay. The Labour Bureau, part of the Ministry of Labour, releases this CPI data monthly. Notably, DA benefits employees, while DR benefits pensioners, both of which are typically adjusted twice annually, in January and July. The most recent adjustment was in October 2023, raising the DA to 46%. With current inflation rates, another 4% hike is anticipated. These increases will be retroactively applied from January 1, 2024, allowing for arrears for employees and pensioners. The calculation formula, based on the 7th Pay Commission’s recommendations, is specified for computing DA and DR.
Key Points
- Anticipated DA Increase: The central government is expected to raise the Dearness Allowance (DA) for its employees by 4% in March, boosting the total DA and Dearness Relief (DR) to over 50%.
- Basis for Calculation: The hike is determined using the Consumer Price Index (CPI) for industrial workers, with a 12-month average CPI of 392.83 leading to a DA of 50.26% of the basic salary.
- Data Publication: The CPI data, crucial for calculating the DA, is published monthly by the Labour Bureau, under the Ministry of Labour.
- DA vs. DR: DA applies to active employees, whereas DR benefits pensioners, with both typically reviewed and adjusted biannually.
- Recent Adjustments: The last DA increase occurred in October 2023, with a 4% rise setting the DA at 46%. Another 4% increase is anticipated based on current inflation trends.
- Retroactive Application: The upcoming DA hikes will be applied retrospectively from January 1, 2024, allowing employees and pensioners to receive arrears for the preceding months.
- Calculation Formula: The DA and DR are calculated using a specific formula based on the 7th Central Pay Commission’s guidelines, which takes into account the 12-month average of the AICPI-IW.
