DA is likely to increase by 3% for central government employees and pensioners from July 2024; how much will the salary increase and when will you receive it?

Central government employees and pensioners are looking forward to another round of joy as the Union government is set to announce a hike in Cost of living allowance (DA) and Relief from famine (DR) soon. Normally, the Union government reviews the DA twice a year, in January and July, and official announcements are usually made later. How long will it take? DA Walk Can central government employees wait for this moment? Check out the latest news Calculating DA Increase here.

What is the expected increase in Dearness Allowance for central government employees this time?

The calculation of the DA is based on the latest Consumer Price Index for Industrial Workers (CPI-IW), which is published monthly by the Labour Bureau of the Ministry of Labour. The formula for calculating the Dearness of Living Allowance for central government employees as per the 7th Pay Commission is:

7th CPC DA% = [{12 month average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100]

The upcoming DA hike will benefit thousands of central government employees and pensioners whose salaries are based on the recommendations of the Seventh Pay Commission.

Source: CPI-IW data published by the Labor Office
*The linking factor for the conversion from base year 2016=100 to base year 2010=100 is 2.88.

7th CPC DA% = [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100]
=[{400.90-261.42}/261.42×100]
= 53.35

According to the latest data, the average consumer price index for industrial workers (CPI-IW) for last year stands at 400.90. Applying the statutory formula, the dearness allowance (DA) is projected to be 53.35% of the basic pay. Considering this, the Union government is expected to announce an increase in DA to 53% for central government employees.

Central government employees and retirees currently receive a Dearness Allowance and a Dearness Relief of 50% respectively.

How much will the salaries of central government employees increase with a 3% DA increase?

A 3% increase in Dearness Allowance (DA) will provide a much-needed boost to the salaries of central government employees. DA is a component of salary designed to offset the impact of inflation. An increase in DA revises the effective salary of government employees periodically.

For a central government employee, the next increase in DA will translate into an increase in take-home pay. Take the case of a central government employee who draws a basic salary of Rs 55,200 per month. At the rate of 50%, his dearness allowance was Rs 27,600. Now, if the DA is increased to 53%, his DA will increase to Rs 29,256. If the DA is increased by 3% in the next round, his salary will increase by Rs 29,256 – Rs 27,600 = Rs 1,656.

Periodic review of the DA is crucial to maintain the purchasing power of public employees in the face of rising prices.

How much will the salaries of central government pensioners increase with a 3% increase in the RD?

Central government pensioners will receive a long-awaited increase in their monthly pensions with the planned 3% increase in the High Cost Allowance (DR). Like the High Cost Allowance (DA) for employees, the High Cost Allowance is a component of pensions intended to mitigate the impact of inflation.

With 50% dearness relief, a pensioner with a basic pension of Rs 45,400 currently receives a dollarisation of Rs 22,700. A 3% increase in dollarisation would take this figure to Rs 24,062. This implies a monthly increase of Rs 1,362 in salary.

When can central government employees expect the next DA increase?

Central government employees and pensioners will soon receive an advance increase in their Dearness Allowance and Dearness Relief. Currently, central government employees receive Dearness Allowance of 50% of the basic salary, while pensioners receive Dearness Allowance of 50% of the basic pension. The latest increase in Dearness Allowance was announced on 7 March 2024 and came into effect on 1 January 2024.

It is important to note that any increase in DA/DR is usually implemented retroactively from January 1 and July 1 of the year. Therefore, if the central government announces the DA now, central government employees and pensioners will be entitled to receive the arrears for the previous months.

Last year, the DA hike applicable from July 1, 2023, was announced on October 18, 2023. Historically, the central government announces the July DA hike before the festive season. Given the government’s timeline for DA revisions, an announcement on the next hike is expected soon. This upcoming DA and DR hike will benefit over one crore central government employees and pensioners, providing a significant financial boost amid rising living costs.