In a good news to government employees, the Centre has approved 4 per cent of increament to the Dearness Allowance (DA) before Diwali. The decision was taken in a Union Cabinet meeting.
After applying the new rule, the DA has been to 46% from the existing 42%. The hike will be applicable from July 1, 2023. This change will positively impact more than 48.67 lakh central government employees and 67.95 lakh pensioners. The increase follows a prescribed formula based on the recommendations of the 7th Central Pay Commission.
Additionally, the Cabinet has also given its approval for a Productivity Linked Bonus (PLB) for railway employees, equivalent to 78 days of pay.
Over 45 lakh To Be Benefitted
The calculation of dearness allowance for employees and pensioners relies on the monthly Consumer Price Index for Industrial Workers (CPI-IW) published by the Labor Bureau, a branch of the labor ministry. The most recent DA revision occurred on March 24, 2023.
The hike approval has come merely a few weeks prior to Diwali. The decision will impact 47 lakh central government employees and 68 lakh pensioners. The increament will have a tangible effects on salaries.
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New Calculation
Employees who have a minimum basic salary of Rs 18,000 gets an extra monthly income of Rs 7,560 after applying 42% DA. However, once the new rule is applicable, these employees will get Rs 8,280, according to 46% DA.
Likewise, those with a highest basic salary of Rs 56,900, who presently receive the advantages of a 42% Dearness Allowance (DA), see an increase in their monthly earnings from Rs 23,898 to Rs 26,174 with the new 46% DA.
To provide further explanation, Dearness Allowance (DA) functions as an allowance to adjust for the cost of living for government employees, while Dearness Relief (DR) assists pensioners of the central government in managing the increased cost of living. The government updates the rates of both DA and DR every six months.
