4% DA Hike: As the government has taken a much-awaited decision to hike dearness allowance (DA) and dearness relief (DR) by 4 per cent, it has come as a bonanza for 48 lakh central government employees and 68 lakh pensioners in the country ahead of Diwali and festive season. Now, the salaries of central government employees will increase.
The decision to raise the DA was taken at a Union Cabinet meeting on Wednesday. After the hike, the DA or DR will now be 38 per cent of the basic pay or pension, respectively. It will be effective from July 1, 2022. The DA was last time revised in March.
How Much Your Salary Will Increase
The DA hike will raise the dearness portion of central government employee salaries. For example, if somebody’s salary is Rs 50,000 per month and has Rs 15,000 as the basic pay. You till now get Rs 5,100, which is 34 per cent of the basic pay. However, now after the 4 per cent hike, you will get Rs 5,700 per month, which is Rs 600 higher. So, if you have a Rs 50,000 salary a month with Rs 15,000 as the basic pay, your salary will rise by Rs 600 per month.
Financial Impact On Government Exchequer
The government has said the combined impact on the exchequer on account of both DA and DR will be of the order of Rs 12,852.56 crore per annum; and Rs 8,568.36 crore in the financial year 2022-23 (i.e. for a period of 8 months from July 2022 to February 2023).
How Does Government Decide On The DA Hike?
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.
In March, the Union Cabinet had approved to increase 3 per cent in DA under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income.
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
Rajasthan Govt Also Raises DA
A Day after the Centre’s move, the Rajasthan government on Thursday hiked the DA and DR for state government employees by 4 per cent. According to a statement by the Chief Minister’s Office, “Now, 38 per cent dearness allowance will be payable to state employees and pensioners from July 1, 2022.”
It added that the decision is expected to benefit 8 lakh employees and 4.40 lakh pensioners.