Dearness Allowance from July 2023 will be 46% and not 45%

Sone of the leading news portals have suggested that the Central Government is likely to increase the Dearness Allowance (DA) for its vast workforce, comprising over 1 crore employees and pensioners. However, the reports indicating a 3 percentage point increase to 45% from the existing 42% are not entirely accurate. Ref: Business Today, Financial Express. 

After careful consideration and calculation of the All India Consumer Price Index for Industrial Workers (AI CPI-IW) data, the Central Government Employees are supposed to get 46%, a 4%  increase in the DA, effective from July 2023. The calculation is based on the Consumer Price Index for Industrial Workers (CPI IW) indices from July 2022 to July 2023. 

However, it has to be noted that government announcement Dearness Allowance (DA) hike will not be made immediately. The approval for the DA hike is expected to be granted by the union cabinet around the end of September or the beginning of October. Following this approval, the Finance Ministry will then issue the necessary office memorandum to implement the hike. Last year, in 2022, the order for the DA hike was issued on October 3, 2022, and it is likely that a similar timeline may be followed this year.

The CPI IW is calculated and published by the Labour Bureau, which operates under the Ministry of Labour and Employment, Government of India.

The CPI IW serves as an important economic indicator as it reflects the inflationary trends and cost of living adjustments for the industrial workforce. It takes into account various items such as food, clothing, housing, fuel, education, medical expenses, transportation, and other essential commodities and services commonly used by industrial workers and their families.

The index is calculated based on a predetermined basket of goods and services, and the prices of these items are collected periodically from selected centers across the country. The data is then used to calculate the percentage change in prices compared to a base year, which is set at 100. The index number represents the average price change for the basket of goods and services over time.

The enhanced DA will provide much-needed relief to government employees and pensioners, helping them manage their household expenses and maintain their standard of living.

Government employees and pensioners are eagerly awaiting for news regarding the DA revision. The higher DA rate is expected to positively influence their financial well-being and contribute to improved consumer spending, which can further stimulate economic growth.

Expected Dearness Allowance (DA) from July 2023 Calculator