7th pay commission: DA likely to be hiked by 4% soon — Know how it is calculated

The central government is likely to increase dearness allowance (DA) under 7th Pay Commission for its employees and pensioners by four percentage points to 42 percent from existing 38 percent. The announcement of the Dearness Relief (DR) hike for central government pensioners is also expected. However, there is no official notification on the same.

As per the speculations, employees could receive their revised salary from March 31, 2023. Apart from this, the arrears for the months of January and February will also be added to the final amount, according to a report by PTI.

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 percent based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June, 2022.

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.

On the other hand, dearness relief (DR) is the same as allowance and is given to central government pensioners.

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

The dearness allowance for employees and pensioners are worked out 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.

For central government employees: Dearness Allowance percent = ((Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76) *100

AICPI stands for All India Consumer Price Index.

For public sector (central government) employees this formula is used:

Dearness Allowance percent = ((Average of AICPI (Base Year 2016=100) for the past 3 months -126.33)/126.33) *100.