7th Pay Commission: Government employees are in wait for the Centre’s decision on the dearness allowance, which is expected to raise their salaries. The DA is revised twice a year — January and July. The government’s decision on DA, which was supposed to be announced at the end of July, is yet to be announced. However, media reports said the dearness allowance is expected to increase 4 per cent this time to set off the impact of inflation.
DA and DR are revised on the basis of retail inflation-industrial workers. After remaining high for the past few months, the retail inflation for industrial workers stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower prices food and fuel. The all-India CPI-IW (consumer price index for industrial workers) for June 2022 witnessed an increase by 0.2 points and came in at 129.2 points. The CPI-IW in May was 129 points.
Dearness allowance (DA) is given to government employees, while dearness relief (DR) is for pensioners.
Going by the reports, if the DA is revised upwards by four percentage points, it will increase to 38 per cent. 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.
Earlier, In July 2021, the Centre had increased the DA and DR 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.
The government has already increased DA for railway employees along with the release of arrears, under the 6th Pay Commission. The allowance was increased by 14 per cent.
Meanwhile, 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 recently, the central government might also release the arrears withheld from January 2020 to June 2021.
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.
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