Central Govt Employees: DA Likely to Restore Soon. How Much Salary Hike Can You Get?

The Dearness Allowance (DA) and Dearness Relief (DR) benefits are likely to be increased for central government employees from July by 3 per cent, according to reports. It is also likely to be restored in September the reports mentioned. This comes in light of the data from the All India Consumer Price Index (AICPI). The AICPI report with information about the DA from January to May 2021 was released and the DA is likely to go up from this month. Under the 7th pay commission, the current situation stands with Central government employees and pensioners receiving 17 per cent DA. The DA is a part of the salary given to government employees and pensioners, which is aimed at aiding them in the fight against inflation, by providing a buffer of sorts.

Reports indicate that this number will likely jump to 28 per cent after the three remaining DA instalments are restored. Under the 7th pay commission, the DA was hiked in January of 2020 by 4 per cent. This was again hiked in June of 2020 by 3 per cent. As of late, in January 2021, the DA was further increased by 4 per cent, according to reports.

What is a Dearness Allowance?

A Dearness Allowance (DA) is a sum paid to Central Government Employees and pensioners, in an attempt to offset the rising inflation in the country. Despite the government’s efforts, nationwide inflation is continuous. It is then the government’s responsibility to shield its employees and pensioners from the brunt of the price hikes. Inflation drives prices at different rates across the country, depending on the location. Therefore, based on the location of the employee and the rate of inflation at that time of the year, the DA is calculated accordingly. These locations can be broadly classified into urban, semi-urban and rural areas.

Measuring Dearness Allowance

Given that DA is used to combat the rising prices brought on by inflation every year, the DA is calculated and revised twice a year. Revisions take place in January and July. In 2006, the government revised the way DA was calculated and introduced a new formula for the same.

1) For Central government employees: DA per cent = {(Average of AICPI (Base Year -2001=100) for the past 12 months -115.76)/115.76} x 100

2) For Central public sector employees: DA per cent = {(Average of AICPI (Base Year 2001=100) for the past 3 months -126.33)/126.33} x 100

Taking into consideration these previous hikes as well as the allotted DA amount for the Central government employees and pensioners, the latest rise is supposed to be around 28 per cent. With the added 3 per cent hike expected, this number is most likely set to hit a 31 per cent total increase as of September of this year.

The figures for May 2021, AICPI, has been given but the data for June is yet to be released. It should be noted that the index point went up by 0.5 points in May and currently stands at 120.6. Reports suggest that a significant increase is not expected for June. As per Business Today, the index point is not expected to exceed the 3 per cent mark as this would mean an index point rise to the 130-points mark, which the report says is unlikely. Earlier in July, reports that the DA would be resuming from this month onwards were circulating on social media platforms, however, the Finance Ministry clarified that it had yet to issue any such notice.

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