7th Pay Commission: The Center is expected to announce the second hike in Dearness Allowance (DA) and Dearness Relief (DR) for employees and pensioners in early September. The Narendra Modi-led government will approve a 3% hike in DA and DR during this period. DA or dearness allowance is given to active government officials. Whereas retired people get DR or dearness relief.
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7th Pay Commission: DA 50%
Dearness allowance for central government employees has been increased to 50% from January 1, 2024. With DA reaching 50%, various allowances including House Rent Allowance (HRA) have been increased in recent months. The government usually increases DA/DR twice a year. And reveals an increase in March and September respectively. However, this increase is applied retroactively from January and July every year.
7th Pay Commission: changes in retail prices
The increase in DA is based on All India Consumer Price Index (AICPI). Which tracks changes in retail prices in different regions. Earlier, the increase in DA was determined using the Consumer Price Index with the base year of 2001. However, the government has now substituted a new consumer price index with base year 2016 for calculating DA from September 2020.
7th Pay Commission: employees and pensioners
During the monsoon session of Parliament, questions were raised regarding non-payment of 18 months of DA dues. Two MPs asked the Finance Minister whether the government was considering distributing 18 months of stalled inflation benefits to central government employees and pensioners.
A decision that was postponed during the COVID-19 pandemic crisis. MPs demanded answers from the government and an explanation as to why the dues were being withheld, especially considering that the economy is the third largest in the world. Further, he sought information about the representations received on the matter till 2024 and the steps taken by the authorities thereafter. In a written reply in the Rajya Sabha, Minister of State for Finance Pankaj Choudhary said: “The decision to stop three installments of Dearness Allowance (DA)/Dearness Relief (DR) to Central Government employees/pensioners from 01.01.2020 and 01.01.2021 is a decision taken by the Government.
To ease pressure on finances, taken in the context of COVID-19. Which caused economic disruption. The Center saved Rs 34,402.32 crore by stopping three installments of DA. The Center used this fund to meet the economic impact of the COVID-19 pandemic.
7th Pay Commission: DA calculation formula is as follows
केंद्र सरकार के कर्मचारियों के लिए
For Central Government Employees
DA% = [(Average CPI in past 12 months (Base year 2001 = 100) – 115.76)/115.76] x 100
For Public Sector Employees
DA% = [(Average CPI for last 3 months (Base: 2001=100) – 126.33)/126.33] x 100
From December 2023 to June 2024, CPI-IW increased by 2.6 points from 11.5 points to 12.5 points. 138.8 to 141.4. As a result, the percentage increase in DA is expected to increase from 50.28% to 53.36%.
Let’s analyze two scenarios for calculating Dearness Allowance (DA) for government employees.
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