7th Pay Commission: How Much Will Govt Employees' Salary Increase After Latest 4% DA Hike?

7th Pay Commission: Even as the central government has hiked dearness allowance or DA by 4 per cent, the government employees’ salaries are going to increase. The 4 per cent DA hike is in line with the inflation rise in the country. The government has also given its approval to release an additional instalment of DA to central government employees and dearness relief to pensioners with effect from January 1, 2023.

How Much Will Salary Increase?

The 4 per cent hike in DA and dearness relief (DR) will increase the salary of 47.58 lakh central government employees and pension amount for 69.76 lakh pensioners. The DA is given to employees based on the basic pay of the employees, while the DR is given on the basis of basic pension.

For example, if a government employee’s monthly take-home salary is about Rs 42,000 and the Basic Pay is around Rs 25,500; then he/ she must be getting Rs 9,690 as the dearness allowance. Now, this DA amount will increase to Rs 10,710 after the latest 4 per cent DA hike. So, there will be an increase of Rs 1,020 in monthly take-home salary in this case.

Similarly, the monthly pension will also increase for 69.76 lakh pensioners. For example, if someone gets a basic pension of Rs 30,000 a month, then he used to get Rs 11,400 as dearness relief. Now, the amount will increase to Rs 12,600, thus raising the pension by Rs 800 per month.

The DA and DR hike will become effective from January 1, 2023.

DA and DR are revised twice a year — January and July. Dearness allowance is given to government employees, while the dearness relief is for pensioners.

How is DA Hike Decision Taken?

The central government revises the DA and DR for employees based on a formula. Following is the formula:

Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.

For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.

The average CPI-IW of the last 12 months is 372.2 currently. Following the formula, DA is coming to 42.37 per cent. So, the Union government increased the dearness allowance to 42 per cent.

“This increase (of 4 per cent in DA) is in accordance with the accepted formula which is based on the recommendations of the 7th Central Pay Commission,” according to an official statement released on Friday.

It added that the combine impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 12,815.60 crore per annum.

Last revision in DA was done on September 28, 2022, which was effective from July 1, 2022. The Centre had increased DA by four percentage points to 38 per cent based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June, 2022.

The DA is provided to employees and pensioners to compensate them for rising prices.

DA Arrears

“The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today (Friday, March 24) has given its approval to release an additional instalment of Dearness Allowance to Central Governments employees and Dearness Relief to Pensioners with effect from 01.01.2023,” according to the statement.

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