With the rise of DA/DR, the allowance touched 53 percent of the basic pay level, triggering speculation that there might be a merger of DA with basic salary.
7th Pay Commission Latest Update: The Modi government hiked the dearness allowance of central government employees and the dearness relief (DR) of pensioners by 3 percent for the July-December 2024 period. With the rise of DA/DR, the allowance touched 53 percent of the basic pay level, triggering speculation that there might be a merger of DA with basic salary.
To recall, in 2004, the DA was merged with basic pay after hitting the 50 percent mark. However, it is important to note that the Centre has maintained its stance that DA will not merge with basic pay despite it breaching the 50 percent level.
According to a Financial Express report quoting a senior government official, during the 5th Pay Commission, dearness allowance got merged into the basic as the consumer price index rose by 50 percent over the base index used by the previous pay commission.
When will the next DA hike be announced?
Reports suggest that the next Dearness Allowance (DA) hike will be announced in March before Holi festival. However, the hike will be effective from January 2024. The Centre revises DA and DR for employees and pensioners twice a year in March and September/October every year. The revision takes effect in January and July, and central government employees typically receive their revised salaries in April and October, along with two to three months of arrears.
How is DA calculated for central government employees?
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
DA Calculation for Public Sector Employees:
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100
AICPI means the All-India Consumer Price Index.