DA Hike Update: Govt Likely to Raise Dearness Allowance by 4% to 42%, Says Report

The central government is likely to increase the dearness allowance (DA) for its over one crore employees and pensioners by four percentage points to 42 per cent from the existing 38 per cent as per the agreed formula for the purpose, news agency PTI reported.

The DA hike for employees and pensioners is decided on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month. The Labour Bureau is a wing of the labour ministry.

Talking to PTI, Shiva Gopal Mishra, general secretary of the All India Railwaymen Federation, said, “The CPI-IW for December 2022 was released on January 31, 2023. The dearness allowance hike works out to be 4.23 per cent. But the government does not factor in hiking DA beyond the decimal point. Thus, DA is likely to be increased by four percentage points to 42 per cent.”

He further explained that the expenditure department of the Finance Ministry will formulate a proposal to hike DA along with its revenue implication and will put up the proposal before the Union Cabinet for approval.

The DA hike will be effective from January 1, 2023. Currently, over one crore central government employees and pensioners are getting 38 per cent dearness allowance.

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. The cost of living increases over a period of time and is reflected through CPI-IW. The allowance is revised periodically twice a year.

Fitment Factor Hike

Central government employees are also likely to get a hike in their salary even as the Centre is expected to revise upwards the fitment factor after Holi, March 8, according to media reports. The minimum salary is expected to see a rise from Rs 18,000 to Rs 26,000 for central government employees.

The common fitment factor currently stands at 2.57 per cent. It means that if somebody, let’s say, gets a basic pay of Rs 15,500 in 4200 Grade Pay, his total pay will be Rs 15,500×2.57 or Rs 39,835. The 6th CPC had recommended the fitment ratio at 1.86.

According to the reports, employees are now demanding the government to raise the fitment factor to 3.68. The hike will raise the minimum wage from Rs 18,000 currently to Rs 26,000.

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