Govt hikes DA by 4% under 7th Pay Commission; details here

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The Union Cabinet has hiked Dearness Allowance (DA) of central government employees and pensioners by 4 percent under the 7th Pay Commission, announced Anurag Thakur, Minister of Information and Broadcasting, on September 28.

The hike takes DA to 38 percent from current 34 percent of basic pay/pension. The Finance Ministry said that the central government employees and pensioners will become entitled to higher amount of Dearness Allowance (DA) and Dearness Relief (DR), respectively, w.e.f. July 1, 2022.

Speaking at a press conference in New Delhi, the Union Minister added that the hike in salary and pension will benefit over 50 lakh government employees and about 62 lakh pensioners ahead of the festive season.

Meanwhile, Finance Minister Nirmala Sitharaman took to Twitter to add that the combined impact on the exchequer on account of both DA and DR (Dearness Relief)  would be Rs 12852.5 crore per annum.

Cabinet decides to release additional instalment of Dearness Allowance (DA) to central govt employees & Dearness Relief (DR) to pensioners w.e.f. 01.07.22 representing an increase of 4% over the existing rate of 34% of Basic Pay/Pension. (1/2)#CabinetDecisions https://t.co/z4AnzPpGhq

— NSitharamanOffice (@nsitharamanoffc) September 28, 2022

Further, the combined impart on the exchequer on account of both DA and DR will be Rs.8,568.36 crore in the financial year 2022-23 (i.e. for a period of 8 months from July, 2022 to February, 2023).

The Union Cabinet had in March approved to increase 3 per cent in dearness allowance (DA) under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income.

Dearness Allowance (DA) is the cost-of-living adjustment allowance which the government pays to the employees of the public sector as well as pensioners of the same.

The government usually revises the DA rate every six months. This is done to compensate for the loss in purchasing power of the monthly salary/pension wealth due to inflation.

How is Dearness Allowance calculated?

In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.

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.