DA Hike 7th Pay Commission: In a decision that will benefit 50 lakh central government employees and 65 lakh pensioners, the Union Cabinet has approved a hike of 4 per cent in dearness allowance (DA) and dearness relief (DR), effective July 1, 2022. The 4 per cent hike will now take the DA and DR to 38 per cent of basic pay or pension, respectively.
While addressing a Cabinet briefing on Wednesday, Union Minister Anurag Thakur said that the decision will cost Rs 12,852 crore to the government exchequer.
“Cabinet approves release of additional instalment of Dearness Allowance and Dearness Relief @ 4% to Central Government employees and pensioners, due from 01.07.2022,” PIB said in a tweet on Wednesday.
Cabinet approves release of additional instalment of Dearness Allowance and Dearness Relief @ 4% to Central Government employees and pensioners, due from 01.07.2022#CabinetDecisions
— Satyendra Prakash (@DG_PIB) September 28, 2022
“The additional financial implications on account of this increase of Dearness Allowance to Central Government employees are estimated at Rs.6,591.36 crore per annum; and Rs.4,394.24 crore in the financial year 2022-23 (i.e. for a period of 8 months from July, 2022 to February, 2023),” according to an official statement.
It added that the additional financial implications on account of this increase of DR to pensioners are estimated at Rs 6,261.20 crore per annum; and Rs.4,174.12 crore in the financial year 2022-23 (i.e. for a period of 8 months from July 2022 to February 2023).
The combined impart on the exchequer on account of both DA and DR would be of the order of Rs 12,852.56 crore per annum; and Rs 8,568.36 crore in the financial year 2022-23 (i.e. for a period of 8 months from July 2022 to February 2023).
How is DA under 7th Pay Commission Calculated, How Is DA Hike Decided?
DA and DR are revised twice a year on the basis of retail inflation-industrial workers. Dearness allowance (DA) is given to government employees, while dearness relief (DR) is for pensioners.
The retail inflation for industrial workers remained high for the past few months. It stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower food and fuel prices. The all-India CPI-IW (consumer price index for industrial workers) for June 2022 witnessed an increase by 0.2 points and came in at 129.2 points. The CPI-IW in May was 129 points.
“The Cabinet, chaired by Prime Minister, Shri Narendra Modi, has approved the release of additional instalment of Dearness Allowance and Dearness Relief @ 4 per cent to Central Government employees and pensioners due from 01.07.2022 based on the percentage increase in 12 monthly average of All India Consumer Price Index for the period ending June, 2022,” according to the official statement.
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
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