Centre Announces 4% DA Hike, Here's What It Means For Central Govt Employees

7th Pay Commission: In a bonanza for central government employees, the Union Cabinet on Thursday approved a 4 per cent hike in dearness allowance (DA) to 50 per cent of the basic pay. The 4% DA hike, which will benefit over one crore central government employees and pensioners, will become effective from January 1, 2024. Apart from this, HRA has also been increased for the employees.

Briefing about the Cabinet decisions today, Union  Commerce and Industry Minister Piyush Goyal said, “The DA hike will cost the exchequer Rs 12,868 crore.”

The government has also increased dearness relief (DR) by 4 per cent. DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year, with effect from January and July.

How Much Salary Hike Will Central Govt Employees Get?

Since the government has announced a 4 per cent DA hike, how much is the salary hike likely for central government employees? If somebody’s salary is Rs 50,000 per month and has Rs 15,000 as the basic pay. He or she currently gets Rs 6,900, which is 46 per cent of the basic pay. However, after the 4 per cent hike, the employee will get Rs 7,500 per month, which is Rs 600 higher as compared with Rs 6,900 earlier. So, if someone has a Rs 50,000 salary a month with Rs 15,000 as the basic pay, his or her salary will rise by Rs 600 per month.

In the previous DA hike in October 2023, the government had increased the dearness allowance and dearness relief by 4 per cent to 46 per cent.

How Does Govt Calculate DA Hike?

The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All-India CPI-IW. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September/October.

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.