In a development that could bring relief to over 1 crore Central Government employees and pensioners, the Central Government is reportedly gearing up to implement a 3% hike in dearness allowance (DA), increasing it to 45%. This information comes from a report by News Agency PTI, which suggests that the Union Government is poised to raise the DA and Dearness Relief (DR) rates based on an agreed formula.
The existing dearness allowance rate stands at 42%, and this anticipated hike is driven by the latest All India Consumer Price Index for Industrial Workers (AICPI-IW) figures released by the Labour Bureau, a branch of the Labour Ministry. The calculation of DA/DR rates is intricately tied to this index, which is released monthly.
All India Railwaymen Federation General Secretary, Shiva Gopal Mishra, explained, “The CPI-IW for June 2023 was released on July 31, 2023. We are demanding a four percentage point hike in dearness allowance. But the dearness allowance hike works out to be a little over three percentage points. The government does not factor in hiking DA beyond the decimal point. Thus DA is likely to be increased by three percentage points to 45 per cent.”
This proposed increase in DA is part of the government’s ongoing effort to offset the impact of rising prices and maintain parity between employee compensation and cost of living. The expenditure department of the Finance Ministry is expected to create a proposal outlining the hike, along with its financial implications. This proposal will then be presented to the Union Cabinet for approval.
When the announcement is officially made, the DA/DR hike will come into effect retroactively from July 1, 2023. At present, Central Government Employees and Pensioners receive DA/DR at a rate of 42% of their basic pay or pension.
The previous DA hike, implemented on March 24, 2023, was effective from January 1, 2023, when the Central Government increased DA by 4% to reach the current 42% rate. This increase was calculated based on the percentage rise in the 12 monthly averages of the All India Consumer Price Index, which was reflective of the cost of living up to December 2022.
The dearness allowance serves as a mechanism to mitigate the effects of inflation and rising expenses on the livelihoods of government employees and pensioners. This essential allowance is subject to revision twice a year, ensuring it remains aligned with the dynamic economic landscape and the evolving needs of the workforce.