The Union government is expected to give a 4% increase in Dearness Allowance (DA) for central government employees in March. This means they’ll get more money on top of their regular pay.
What’s Happening with DA?
The DA is a bonus given to government employees to help them cope with rising prices. It’s based on the Consumer Price Index for Industrial Workers (CPI-IW), which shows how prices change over time. Right now, the average CPI-IW for the past 12 months is 392.83. This increase will bring the DA to 50% of the basic pay.
Who Benefits from DA?
Both government employees and pensioners benefit from DA. Pensioners get something similar called Dearness Relief (DR). These allowances get updated twice a year, in January and July, to keep up with changes in prices.
Previous Increase and Expectations
In the last hike in October 2023, DA went up by 4% to reach 46%. Given the current inflation rate, experts predict another 4% increase this time.
How Many People Will Benefit?
There are around 47.58 lakh central government employees and 69.76 lakh pensioners. After this upcoming increase, they will all see a positive change in their income.
Calculating DA
The government calculates DA using a formula based on the average CPI. For instance, for the current base year 2016=100, it’s calculated as ((Average CPI for the past 3 months – 126.33) / 126.33) * 100. This helps ensure the increase is fair based on how prices have changed.