Central government employees are likely to get an update on their future dearness allowance (DA) on May 31. The government may give an update on how much DA will be increased at the end of July. The DA is revised twice a year — January and July. Now, since the retail inflation is very high, the chances of a hike in dearness allowance are high, as per reports.
In January, the DA for the central government employees under the 7th Pay Commission was revised upwards to 34 per cent, from the earlier rate of 31 per cent. It is revised based on the All-India Consumer Price Index (AICPI). Now, since the retail inflation is very high, the chances of a hike in dearness allowance are high. The CPI-based inflation in April stood at an eight-year high of 7.79 per cent.
Earlier, In July 2021, the Centre had increased the dearness allowance and dearness relief for the central government employees and pensioners, respectively, to 28 per cent from 17 per cent after a long pause. Again in October 2021, the central government employees witnessed a jump of 3 per cent in dearness allowance. Then, the dearness allowance for the central government employees rose to 31 per cent, effective from July 2021. Now, from January 2022, DA and DR will be paid to the salaried at a rate of 34 per cent, increasing from the earlier rate of 31 per cent.
Dearness allowance (DA) is given to government employees, while dearness relief (DR) is for pensioners.
The central government had held back three instalments of dearness allowance and dearness relief for January 1, 2020; July 1, 2020; and January 1, 2021, in view of the unprecedented situation which arose due to the COVID-19 pandemic. As per reports few days ago, the central government made it clear that general dearness allowance arrears withheld from January 2020 to June 2021 will not be released as of now.
Recently, the central government increased dearness allowance for railway employees along with the release of arrears, under the 6th Pay Commission. The allowance was increased by 14 per cent, according to an official notification. “The rate of DA (dearness allowance) admissible to railway employees of above category shall be enhanced from the existing rate of 189 per cent to 196 per cent with effect from July 1, 2021, and from 196 per cent to 203 per cent with effect from January 1, 2022,” the Ministry of Railways said in the notification earlier this month.
DA Update: How Dearness Allowance is Calculated
The central government in 2006 changed the formula to calculate the DA for central government employees and pensioners.
For the central government employees: Dearness Allowance % = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)*100.
For Central public sector employees: Dearness Allowance % = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)*100.