The previous DA hike of 4% was announced in March, and was effective from January 2024
The central government may announce an increase in both the dearness allowance (DA) and dearness relief (DR) for government employees after is cabinet meeting on Wednesday, October 09, 2024, according to a News 18 Hindi report.
DA is applicable to all the currently serving employees while DR is appplicable to all pensioners. Both are to adjust the salary or pension to the increasing cost of living, driven by inflation.
What is Dearness Allowance (DA) and Dearness Relief (DR)?
DA is applicable to all the currently serving employees while DR is appplicable to all pensioners. Both are to adjust the salary or pension to the increasing cost of living, driven by inflation.
Therefore, the DA hike is calculated based on the All India Consumer Price Index (CPI), which tracks retail price fluctuations across various sectors of the economy.
This comes after the Confederation of Central Government Employees and Workers having addressed Finance Minister Nirmala Sitharaman in a letter regarding the delay in announcing DA/DR hikes.
Usually the government revises DA and DR twice a year in January and July, officially declaring them a little later.
The salaries and pensions of government employees also get adjustments for these arrears created. For example, the DA hike was disclosed in the first week of October, and arrears of the previous three months were also added.
By how much could DA get hiked?
The DA may see a 3% hike, increasing it to 53% from the current 50%, according to the report.
The previous hike was by 4%, announced in March, effective from January 2024 (Arrears will be paid as mentioned above).
The hike will be effective from July 02, 2024, with the three-month arrear adjustment reflecting in the October salary.
DA calculation formula:
DA for central government employees is calculated as follows:
The increase in DA and DR is calculated based on the percentage increase in the 12-month average of the All India Consumer Price Index (CPI-IW) for industrial workers. The government usually revises these allowances on 1 January and 1 July every year.
DA for central government employees is calculated as follows- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
Possible hike in DA for July-October:
Earlier this year, DA was hiked by 4% from January 2024, taking it from 46% to 50%. Now, another hike is expected from July 2024. As per the recent AICPI data, it could rise to 53.36%. In such a scenario, the Modi government is expected to hike DA by 3%, which could take the DA to 53%.
This decision will result in a burden of around Rs 13,000 crore on the government exchequer. Employees are eagerly waiting for this big gift, which will improve their standard of living.