Business: Dearness Allowance Hike as per 7th Pay Commission: The central government may increase dearness allowance (DA) by 3 per cent in September for its employees, according to people familiar with the matter. Sources said a 3 per cent DA hike is certain, but it can also be increased to 4 per cent. “The central government may announce a DA hike of 3-4 per cent in September. A 3 per cent hike is certain, but it can also be increased to 4 per cent depending on the inflation situation,” a source said. Currently, dearness allowance is 50 per cent of the basic salary. There is talk that DA will be merged with the basic salary as per the 7th Pay Commission. On this, the source said, “DA will not be merged with the basic pay in case of inflation allowance exceeding 50 per cent. This will continue till the formation of the 8th Pay Commission. Instead of merger, there is a provision to increase allowances including HRA in case DA crosses 50 per cent, which has already happened.
Importantly, DA had reached 170 per cent in the 4th Pay Commission.
In the last hike in March 2024, the central government had increased the dearness allowance by 4 per cent to 50 per cent of the basic pay. The government has also increased dearness relief (DR) by 4 per cent.
DA is given to government employees, while DR is given to pensioners. DA and DR are increased twice a year from January and July.
On the 8th Pay Commission, in July, the Confederation of Central Government Employees and Workers has made several demands ahead of Budget 2024, including immediate formation of the 8th Pay Commission and restoration of the old pension scheme. “Two representations have been received for constitution of the 8th Central Pay Commission in June 2024,” Minister of State for Finance Pankaj Choudhary said in a written reply in the Rajya Sabha on July 30. There is no such proposal under consideration with the government at present.” Therefore, there is no proposal with the government at present regarding the formation of the 8th Pay Commission. The 7th Pay Commission was constituted in February 2014. Its recommendations were implemented from January 1, 2016. Usually, a pay commission is constituted by the central government every 10 years to revise the remuneration of government employees. How does the government calculate DA hike? DA and DR hikes are decided based on the percentage increase in the 12 monthly average of the All India CPI-IW. Although the central government revises allowances on January 1 and July 1 every year, the decision is generally announced in March and September/October. In the year 2006, the central government had revised the formula for calculating DA and DR for central employees and pensioners.
