7th Pay Commission: Central government employees may get a hike in their Dearness Allowance (DA) starting January 2025. However, recent media reports suggest that the government will wait for the final December numbers for the All-India Consumer Price Index (AICPIN) before officially announcing the DA revision. This might delay the process.
Notably, the government calculates the DA by factoring the cost of living, as measured by the All India Consumer Price Index (AICPI). The government reviews and updates the DA two times a year, once for January to June and again for July to December.
The Union Cabinet approved a 3% increase in the DA for central government employees on October 16, 2024, just before Diwali. Meanwhile, this brought the DA up to 53% from 50%, benefiting over 1 crore central government employees and pensioners.
7th Pay Commission: How DA Is Calculated?
In 2006, the Government introduced a revised formula for calculating DA, which is used today. The current DA calculation is based on the following formula:
- For Central Government Employees- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
- For Public Sector Employees- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100
(AICPI = All-India Consumer Price Index.)
Wait For 8th Pay Commission!
The Indian government’s latest statement regarding the formation of the 8th Pay Commission has caused concern among over 1 crore government employees and pensioners. The Union Finance Ministry clarified in the Rajya Sabha, that, as of now, there are no plans to form new Central Pay Commission.
This sparked the worries among the central government employees and pensioners. Furthermore, the central government employees urged the government to set up a new Pay Commission without any further delay. However, several media reports suggest that the central government may come up with a new mechanism to revise the salaries of employees and pensions of pensioners, based on their performances and inflation.
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