In a festive boost for central employees and pensioners, the Indian Cabinet has approved a 3% increase in dearness allowance (DA). This decision was made in the latest cabinet meeting, providing good news for over 1 crore government employees and pensioners. The dearness allowance will rise from 50% to 53%, effective from July 1, 2024.
Information and Broadcasting Minister Ashwini Vaishnav is expected to make the official announcement shortly, bringing joy to many households ahead of the Diwali festival.
Financial Impact on Salaries
This increase will reflect in the salaries of central government employees in their October paychecks. Specifically, employees will receive three months’ worth of arrears—for July, August, and September—in their October salary. For entry-level employees earning a basic salary of approximately Rs 18,000 per month, this DA hike translates to an increase of about Rs 540 per month.
Delayed DA Increase Raises Concerns
Prior to this announcement, employees had expressed concerns regarding the delay in the DA and Dearness Relief (DR) adjustments. On September 30, 2024, the Central Employees Federation reached out to Finance Minister Nirmala Sitharaman, voicing their dissatisfaction. The federation’s General Secretary, SB Yadav, highlighted that the delay had caused unrest among employees and pensioners.
Understanding Dearness Allowance (DA) and Dearness Relief (DR)
Dearness Allowance is a cost-of-living adjustment paid to government employees, while Dearness Relief is provided to pensioners. These allowances are adjusted twice a year, typically in January and July, based on the All India Consumer Price Index (AICPI).
How are DA and DR Calculated?
The rates of DA and DR are determined based on the percentage increase in the 12-month average AICPI. Although the rates are revised biannually, official announcements usually follow a few months later, in March and September.
In 2006, the government modified the formula for calculating DA and DR, which is defined as:
DA Percentage = {(AICPI average of last 12 months−115.76)/115.76}×100
Looking Ahead
This DA hike is a much-awaited decision for many government employees and pensioners. With the festive season approaching, the increase in allowances will help ease financial burdens and provide a much-needed boost in income. The government’s move reflects its commitment to support its employees during these challenging economic times, ensuring they receive adequate compensation in line with rising living costs.
As the official announcement is expected soon, employees and pensioners can look forward to enjoying the benefits of this increase, making their celebrations a little brighter this Diwali.
