Dearness Allowance to be hiked by 3% for central govt employees, Cabinet to make announcement today

The Union government is all set to increase the Dearness Allowance or DA by 3 per cent for the central government employees on Wednesday, sources told News18.com. The surge in Dearness Allowance will provide much-needed relief to thousands of beneficiaries amid rising fuel and oil prices and inflation.

The Union Cabinet headed by Prime Minister Narendra Modi is expected to announce Dearness Allowance and Dearness Relief hike for central government employees on 30 March, the sources confirmed.

The revision in DA was stalled for over one-and-half years due to coronavirus pandemic. In July, 2021, the Centre rose the Dearness Allowance and Dearness Relief for the central government employees 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. With the latest hike, the DA for the central government employees rose to 31 per cent, effective from July, 2021. Similarly, the Dearness Relief for central government pensioners was also climbed to 31 per cent.

DA hike for central govt employees: What to Expect

To cope up with the rising inflation, the Centre will announce another 3 per cent hike in DA and DR for the central government employees and pensioners. Then, the dearness allowance will jump to 34 per cent of the basic salary. This decision will benefit over 50 lakh government employees and 65 lakh pensioners.

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What is Dearness Allowance?

Dearness Allowance is a component of salary of government employees and pensioners, aimed at soothing the impact of inflation. To cope up with the increasing inflation rates, the effective salary of government employees is revised periodically. As DA aims to combat inflation, the Centre revise DA twice every year – in January and July. It must be noted that Dearness Allowance varies from employee to employee based on whether they work in urban sector, semi-urban sector or the rural sector.

How Dearness Allowance is calculated

In 2006, the Union government changed the formula to calculate the Dearness Allowance 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.

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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

Now, according to the data by the All-India Consumer Price Index, the central government employees is looking at a hike of 3 per cent in their Dearness Allowance after the latest hike.

A central government employee gets Rs 18,000 per month. The Dearness Allowance in his salary will increase by 3 per cent. With 34 per cent DA, he or she will witness a jump of Rs 6,120 in the monthly salary. It must be noted that the dearness allowance is linked to the basic salary. So, a hike in DA will also increase the the monthly provident fund (PF) and gratuity amount of the central government employees. After the revision in Dearness Allowance, the monthly contribution to Provident Fund, gratuity, Travel Allowance will also go up for the central government employees.

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