DA Likely Hiked By 3% For Central Government Employees Ahead Of Diwali

Central government employees and pensioners are in for a Diwali treat, as the Union Cabinet approved a 3% increase in dearness allowance and dearness relief during its meeting on Wednesday, as revealed by sources to NDTV.

The decision comes a week after NDTV Profit had reported, citing employee unions, that the dearness allowance and dearness relief was set to be raised by 3% by the Union Cabinet.

While a rise was anticipated after the Cabinet meeting on Oct. 9, employees and pensioners had to wait a bit longer for this revision.

The latest hike raises the DA from 50 to 53% of the basic salary. The increase will come into effect from July 1, 2024, NDTV reported.

The biannual revision of dearness allowance and dearness relief, which impacts approximately one crore employees and pensioners, is aimed at mitigating the effects of inflation.

In March, the government raised the dearness allowance by 4%, effective from January 2024, bringing the total dearness allowance to 50% of basic pay from 46%.

The calculation for this allowance is based on the average of the All India Consumer Price Index over the previous 12 months, making it a crucial component in determining government salaries and pensions.

According to the 7th Pay Commission report, a slew of allowances including house rent allowance is eligible for automatic revision once the DA reaches 50% of the basic pay. These allowances, including HRA, were accordingly raised earlier this year, the Confederation of Central Government Employees confirmed.

However, the basic pay has not been raised as such a recommendation was not part of the final 7th Pay Commission report.

All public sector employers determine basic salaries for their employees based on established pay scales. Various additional components are then calculated relative to the basic salary and added to it to arrive at the final take-home pay. One of these key components is the dearness allowance.