7th Central Pay Commission: The Union Cabinet, under the leadership of Prime Minister Narendra Modi, is set to meet today, October 16, 2024. According to several media reports, the Cabinet will increase the dearness allowance (DA) and dearness relief (DR) for central government employees and pensioners by 3%. This will come up as a Diwali bonanza for over 1 crore central government employees and pensioners.

Currently, central government employees receive DA at 50% of their basic salary. The pensioners receive DR at 50% of their basic pension. The most recent hike in DA was of 4%, announced in March 2024, and effective from January 2024. The hike DA and DR is likely today, however, there is no official confirmation yet.

7th Central Pay Commission: What Will Change?

Let’s take an example of an employee whose basic salary is Rs 22,000. The 3% hike in DA could translate into the hike of Rs 660 per month is his/her salary.

In simple terms, a central government employee with a basic salary of Rs 22,000 gets 11,000 as DA at current 50% rate. This makes his/her monthly pay (Basic + DA) Rs 33,000. If the central government increase the DA by 3%, he/she is entitled to get Rs 11,660 as DA every month. This takes the monthly pay (Basic + DA) of that employee to Rs 33,660.

The same calculation is applicable in case of pensioners, who are entitled to get DR.

What Is DA?

Dearness Allowance (DA) is a percentage of the basic salary provided to employees. DA is to help employees mitigate the effects of inflation on their cost of living. DA is adjusted periodically, typically every six months, to reflect changes in the cost of living. Central government revises the DA rates for its employees, whereas, the state governments revise the rates for their employees.

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