Will the DA hike be taken up by the cabinet today?

Read: Finally cabinet approves Dearness Alloance (DA) hike from July 2023

Central government employees are eagerly awaiting an announcement on the Dearness Allowance (DA) hike for July 2023. The Union Cabinet on Wednesday is likely to consider a proposal to raise Dearness Allowance (DA) and Dearness Relief (DR) by 4 per cent to its serving employees and pensioners. Once decided by the Centre, State governments are also expected to take decsion on similar line.

DA is meant for serving employees and while DR is given to pensioners, who joined service on or before December 31, 2003.

According to sources, once decided, the hike in DA and DR will be made effective from July 1 and effective rate of DA and DR would then be 46 per cent. This means employees and pensioners will get arrears for three months with the salary and pension for September which is expected to be credited in the account by November 1.

DA and DR are calculated based on changes in the Consumer Price Index (CPI) for Industrial Worker (IW) which is prepared by the Labour Ministry. Every year, DA and DR are revised twice and made effective from January and July, respectively.

The last revision also resulted in a 4 per cent increase in DA and DR, which benefitted about 47.58 lakh Central Governments employees and 69.76 lakh pensioners. At that time, it was announced that the combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be ₹12,815.60 crore per annum. 

This revision is done in accordance with the accepted formula which is based on the recommendations of the 7^th Central Pay Commission.

The DA is a component of the salary paid to central government employees to compensate them for the rise in inflation. It is revised twice a year, in January and July. As per the calculation based on the Consumer Price Index for Industrial Workers (CPI-IW), the DA for central government employees is due to increase by 4% to 46% from July 2023.

Generally, the DA due from July is paid before the festivals of Dussehra or Vijaya Dashami to bring goodwill to the employees.  The move will boost to the economy during the festival season with increased consumer spending.

Currently, central government employees receive a dearness allowance (DA) / dearness relief (DR) of 42%. According to sources, the Central Government is likely to announce a 4% DA hike around Dussehra or Vijaya Dashami on Tuesday, October 24, 2023, or at the latest by Diwali on Sunday, November 12, 2023.

In addition to the DA hike, central government employees are also looking for the constitution of the 8th Pay Commission. The 7th Pay Commission was constituted in 2014 and its recommendations were implemented in 2016. Since then, the cost of living has increased significantly, and central government employees are demanding a revision of their pay scales.

What to expect in the coming weeks

Suppose the Cabinet decides on the DA hike on Friday, October 20, 2023. In that case, it is likely to be announced around Dussehra or Vijaya Dashami on Tuesday, October 24, 2023, or at the worst by the Diwali holiday on Sunday, November 12, 2023. The arrears from July 2023 onwards will also be disbursed with the October or November salary, depending on when the DA hike is announced.

In addition to the DA hike, central government employees are also looking for the constitution of the 8th Pay Commission. The 7th Pay Commission was constituted in 2014 and its recommendations were implemented in 2016. Since then, the cost of living has increased significantly, and central government employees are demanding a revision of their pay scales.

Read: Finally cabinet approves Dearness Alloance (DA) hike from July 2023