DA Hike Expected in October 2023, 7th Pay Commission: There’s some good news in store for central government staff whio have been eagerly waiting for the (DA) or Dearness Relief (DR) hike announcement! The increase in DA/DR for central government employees is likely to be announced in a few weeks — most probably in the month of October itself, as per sources. Wheels were in motion for the second half’s announcement ever since the DA hike for H1 was announced was announced by the Central Government in March. The DA hike of 4 per cent — increasing the dearness allowance figure from 38 per cent to 42 per cent — was announced by Union Minister Anurag Thakur on March 24, 2023.
DA Hike: When will Dearness Allowance Hike be announced?
Currently, 42% dearness allowance (DA) / dearness relief (DR) is paid to central government employees. And, if sources are to be believed, a 4 per cent DA hike will likely be announced by the Central Government around Dussehra or Vijaya Dashami — Tuesday, October 24, or latest by Diwali holiday — Sunday, November 12, 2023.
With the DA hike about to be announced for the Central Government employees, the arrears from July 2023 onwards will also be disbursed with October salary (if announced on Dussehra), or alongwith the November salary (in case the DA/DR increase announcement in made around Diwali).
The arrear payment will be done the on the basis of the percentage hike announced — for example – 4 per cent arrear if 4 per cent DA hike is announced.
Dearness Allowance hike in October: What affects DA Hike?
The calculation of Dearness allowance is done with regards to the Consumer Price Index Numbers For Industrial Workers (CPI-IW index) of the corresponding months. As per sources, the rise in the index over the past few months indicates that a DA hike of 4% can be expected by the Central Government employees in October this year (subject to announcement).
DA Hike: How much will Dearness Allowance increase?
Based on the calculations of the 7th Pay Commission, the dearness allowance applicable from July 1, 2023 may increase by 4%. According to experts, even if the CPI-IW index number do not change in the upcoming reviews, the inflation figures of over 6 per cent will likely lead to the dearness allowance rising to 46 per cent, say experts.
DA Hike: How is AICPI-IW index calculation done?
The Ministry of Labour & Employment’s Labour Bureau announces the Consumer Price Index Numbers For Industrial Workers for the previous month – on the last working day of the next month. To Labour Bureau calculates the index number after collecting retail prices data from 317 markets from 88 industrially important centres in India.
DA Hike: Dearness Allowance Formula
For central government employees, the calculation that is used to formulate the dearness allowance is —
Dearness Allowance Formula – [(Average of All India Consumer Price Index AICPI) for the last 12 months – 115.76)/115.76]×100.
For PSU personnel, DA hike is calculated by the below mentioned formula —
For employees working in PSUs (Public Sector Units), the formula used to calculate the Dearness Allowance is – [Average of Consumer Price Index for the last 3 months (Base Year 2001 = 100)-126.33)] x100
DA Hike: What is Dearness allowance?
Dearness allowance is paid to central government employees and pensioners in order to compensate them for rising prices. The rise in the cost of living over time is reflected through CPI-IW, and bearing thsi in mind, the dearness allowance or dearness relief is revised periodically twice a year.