The Anticipated 7th Pay Commission: Central Government Employees’ DA Hike in September 2023

The long-awaited salary hike for central government employees is on the horizon. Reports suggest that the Central Government is gearing up to announce the Dearness Allowance (DA) hike in September 2023, which is set to take effect from July 1, 2023. The expected DA hike is estimated to be 3 percent, pushing the DA rate to an impressive 45 percent.

The calculation of dearness allowance for government employees and pensioners is contingent on the latest Consumer Price Index for Industrial Workers (CPI-IW), published monthly by the Labour Bureau, a wing of the Labour Ministry. The most recent data indicates that the All-India CPI-IW for July 2023 surged by 3.3 points to reach 139.7. When compared on a month-to-month percentage basis, it marked a 2.42 percent increase compared to the previous month, as opposed to the 0.90 percent increase observed during the corresponding months of the previous year.

7th Pay Commission: DA Hike Update

The DA, specifically for government employees, is distinct from Dearness Relief (DR), which applies to pensioners. Both DA and DR experience biannual revisions in January and July. Just last month, Shiva Gopal Mishra, General Secretary of the All India Railwaymen Federation, conveyed to PTI that the Federation was advocating for a four-percentage-point hike in dearness allowance. However, the final increase in dearness allowance is expected to be just over three percentage points.

“DA is likely to be increased by three percentage points to reach 45 percent,”

– Shiva Gopal Mishra, General Secretary, All India Railwaymen Federation

He further mentioned that the expenditure department of the finance ministry would be formulating a proposal outlining the DA hike, complete with its financial implications, to be presented before the Union Cabinet for approval. Presently, more than one crore central government employees and pensioners enjoy a 42 percent dearness allowance. In the previous hike, which took place in March 2023, the DA was boosted by 4 percent, bringing it to the current 42 percent. Given the prevailing inflation rates, multiple reports suggest that the upcoming DA hike is likely to be around 4 percent.

Notably, several state governments, including Madhya Pradesh, Odisha, Karnataka, Jharkhand, and Himachal Pradesh, have recently augmented the dearness allowance for their respective state government employees.

How Does the Government Determine the DA Hike?

The hike in DA and DR is predicated on the percentage increase in the 12-month average of the All India Consumer Price Index (AICPI) up to June 2022. Although the central government revises these allowances on January 1 and July 1 each year, the official announcement typically comes in March and September.

In 2006, the central government revised the formula used to calculate the DA and DR for its employees and pensioners:

For Central Government Employees For Central Public Sector Employees
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months – 115.76) / 115.76) x 100 Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months – 126.33) / 126.33) x 100

This method ensures that the DA and DR are adjusted in line with the cost of living index, providing government employees and pensioners with some relief from rising expenses.

The announcement of the forthcoming DA hike in September 2023 brings hope and relief to central government employees and pensioners who eagerly await the increase in their dearness allowance. As the nation navigates economic challenges and inflationary pressures, this hike is a crucial step towards ensuring the financial well-being of those who serve the country.

Stay tuned for more updates on the 7th Pay Commission and the central government’s decisions regarding the dearness allowance.

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