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Union Cabinet Hikes DA, DR By 4% For Central Govt Employees, Pensioners

The Central government revises the Dearness Allowance (DA) for its employees in January and July every year to mitigate the impact of inflation.

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Outlook Money
October 20, 2023
4 Per Cent Hike In DA and DR

4 Per Cent Hike In DA and DR

The Union Cabinet this week announced an equal hike of 4 per cent in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners, respectively. With the latest hike, the DA and DR for employees and pensioners will increase from 42 per cent to 46 per cent of the basic pay and pension.

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The move, effective July 1, 2023, is expected to benefit some 48.67 lakh central government employees and 67.95 lakh central government pensioners. The Cabinet meeting, chaired by Prime Minister Narendra Modi, approved a 4 per cent hike in DA and DR over the existing 42 per cent of the basic pay/pension to compensate for the price rise.

The government’s October 18 press release said: “The increase is in accordance with the accepted formula, based on the recommendations of the 7th Central Pay Commission.”

The Central government revises the DA and DR for its employees in January and July every year to mitigate the impact of inflation, calculated based on the Consumer Price Index for Industrial Workers (CPI-IW). The DA was last hiked to 42 per cent on January 1, 2023.

Salary Hike Of Central Govt Employees

The central government provides DA and DR to its employees and pensioners based on their basic salary to help employees, pensioners, and their families cope with inflation.

Let’s calculate the hike with an example. Suppose the basic monthly salary of an employee is Rs 39,900, and his DA at 42 per cent was Rs 16,758. In that case, with a 4 per cent hike, his DA jumped to 46 per cent, or Rs 18,534, meaning the salary will increase by Rs 1,596.

The Central government pensioners get DR, an equivalent to DA. So, with a 4 per cent increase in DR, their monthly pension amount will also increase. Let’s say an individual gets a Rs 40,100 monthly pension. At 42 per cent DR, he receives Rs 16,842 as part of the DR component in pension. With the 4 per cent increase, he will receive Rs 18,446 or 46 per cent DR, an increase of Rs 1,604 in the pension amount. The employees and pensioners will receive the revised amount in October, along with the arrears since July 2023.

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