7th Pay Commission: Govt Likely to Announce 3% DA Hike in October?

7th Pay Commission: Central government employees and pensioners are likely to get a Diwali bonanza soon as the Union Cabinet is expected to approve a hike in dearness allowance (DA) and dearness relief (DR) in October in its meeting before Diwali.

Last year, the DA hike was announced in the first week of October.

On September 30, the Confederation of Central Government Employees and Workers wrote a letter to Finance Minister Nirmala Sitharaman expressing concerns over a delay in the DA/DR hike announcement.

In the letter, the confederation’s general secretary S B Yadav said, “There is discontent among employees and pensioners due to the delay in the announcement of DA/ DR.”

The letter added that Durga Puja festival is approaching and the PLB (performance-linked bonus) and adhoc bonus too are to be declared.

According to S B Yadav, the government might announce a 3 per cent hike this time. However, a 4 per cent hike is also likely.

After the hike, salary of the entry-level central government employee, who has a basic salary of around Rs 18,000 per month, will increase in the range of Rs 540-720 per month, effective from July 1, 2024.

After the announcement, the DA will increase from 50 per cent to 53 per cent of the basic pay.

DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year — January and July. Currently, over one crore central government employees and pensioners are getting a 50 per cent dearness allowance.

In the last hike in March 2024, the central government had raised dearness allowance by 4 per cent to 50 per cent of the basic pay. The government also increased dearness relief (DR) by 4 per cent.

How Does Govt Decide on the DA Hike?

The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.

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.