7th Pay Commission DA Hike: October is a significant month for central government employees as they eagerly wait for the announcement of a Dearness Allowance (DA) hike. This increase is expected to bring a welcome boost to their salaries. While there hasn’t been an official confirmation yet, reports suggest that the government is likely to announce a DA hike of 3-4% in the month of October, right before Diwali.
Expected Salary Increase
The DA hike is likely to benefit central government employees across various pay grades. For example, the basic salary of an entry-level government employee, currently around ₹18,000 per month, is expected to increase by ₹540 to ₹720 per month, depending on the percentage of the DA hike. This salary increase will be applied retroactively from July 1, 2024.
Let’s take an example of an employee earning a monthly salary of ₹30,000, with a basic pay of ₹18,000 and a current DA of ₹9,000 (which is 50% of the basic pay). If the government approves a 3% DA hike, the DA will increase by ₹540, making the new DA ₹9,540. If the DA hike is 4%, the employee would see an increase of ₹720, bringing the new DA to ₹9,720. As a result, their overall monthly income could rise by ₹540 to ₹720, depending on the final percentage increase.
What is Dearness Allowance (DA)?
Dearness Allowance (DA) is an essential part of the salary structure for government employees. It is a cost-of-living adjustment allowance to offset the impact of inflation. While DA is provided to government employees, retirees receive a similar benefit called Dearness Relief (DR). These allowances are reviewed and revised twice a year, usually in January and July, based on the rise in the cost of living as reflected in the All India Consumer Price Index (AICPI).
Currently, more than a million central government employees and pensioners benefit from a 50% DA, which was last increased by 4% in March 2024.
How is DA Calculated?
The DA percentage is determined using a specific formula based on the All-India Consumer Price Index (AICPI), which measures inflation. The formula calculates the DA increase based on the average AICPI for the previous 12 months.
For central government employees, the formula is:
- Take the 12-month average of the AICPI (base year 2001 = 100).
- Subtract 115.76 from the result.
- Divide the difference by 115.76 and multiply by 100 to get the DA percentage.
For central public sector employees, the method is slightly different. The calculation is based on the last three months’ average of the AICPI, and a different base figure (126.33) is used in the formula.
History of the 7th Pay Commission
The 7th Pay Commission, which was established in February 2014, made its recommendations effective from January 1, 2016. Its purpose was to revise the pay scales of central government employees and pensioners every ten years. As the current pay commission approaches its 10-year mark, discussions have started about potential further revisions.
There is speculation that central government employees might receive a pay raise soon, with talks about using a fitment factor of 1.92. This could result in the minimum basic salary being increased from ₹18,000 to ₹34,560. Similarly, pensioners could also see a boost in their minimum pension, potentially raising it to ₹17,280.
Conclusion
October is shaping up to be an important month for central government employees, with the DA hike announcement just around the corner. If the expected 3-4% increase goes into effect, employees can look forward to a noticeable rise in their monthly income. Additionally, there are hopes for more substantial salary revisions in the near future as the 7th Pay Commission completes its decade-long cycle.