The current dearness allowance (DA) for central government employees is 42%, after a 4% hike in January 2023. The government is yet to announce the next round of DA hike, but it is expected to be announced after the G20 Summit 2023 concludes on September 10.
The anticipation for a DA hike has grown among central employees and pensioners after the release of the latest inflation data. Retail inflation climbed to 7.44% in July 2023, a 15-month high. DA hikes are crucial for central government employees to deal with the rising prices.
The DA is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW). Earlier reports have claimed that the DA hike is likely to be 3%, taking the DA figure to 45%. The hike could be approved by the Union Cabinet in the third week of September.
All India Railwaymen Federation General Secretary Shiva Gopal Mishra has said that the DA hike will be a little over 3%. He has also said that the government does not factor in hiking DA beyond the decimal point.
Once announced, the second DA hike of 2023 will be effective from July 1 onwards for central government employees.
- The DA is linked to the Consumer Price Index for Industrial Workers (CPI-IW). The CPI-IW is a measure of the prices of goods and services consumed by industrial workers.
- The DA is revised twice a year, in January and July.
- The DA hike is effective from the first day of the month following the announcement.
- The DA is a major component of the salary of central government employees.
- The DA hike helps to offset the rising cost of living for central government employees.
The calculation of DA is based on the agreed formula outlined in the 7th Pay Commission rules, which consider the latest data from the Consumer Price Index for Industrial Workers (CPI-IW). Once officially announced, the second DA hike of 2023 will be effective from July 1 for central government employees.”