7th Pay Commission: As we round the corner to enjoy the upcoming festive season, it is likely that the central government employees will get yet another treat in the form of a hike in their Dearness Allowance (DA) and Dearness Relief (DR). It is speculated that the Central government will likely hike up the DA rates for both employees and pensioners ahead of the festive season by another 3 per cent. This decision will likely come soon as the Central government had already restored the DA of employees. The DA was hiked from 17 per cent to 28 per cent by the government, with the hike applicable for their salaries from July 2021 onwards.
It should also be noted that the government had hiked up the employees’ House Rent Allowance (HRA) from 24 per cent to 27 per cent. With the potential of the DA and DR being hiked again by another 3 per cent, the DA would stand at around 31 per cent against their basic salary in the near future.
There was a previous Dearness Allowance increase in January of 2020 where the government hiked it up by 4 per cent, which was followed by another 3 per cent increase in June of that same year. The central government employees saw yet another hike in January of 2021 where the DA once again went up by 4 per cent.
Having said that, employees’ unions are expecting the announcement of the hike to come through soon. AICPI data suggested that the DA is payable at a 31 per cent rate given that the index for June 2021 increased by 1.1 points, leaving the final number at 121.7.
The DA hike which was expected to be announced sometime in the month of September 2021, will be applicable most likely for the first half of 2021. However, there has not been much noise from the side of the government that indicated that it is planning to announce the increase of DA again. If it is by chance announced this month, then the DA will be payable with the salary of October according to media reports.
However, employee unions hold the view that the government should include the DA hike with the salary for September as well. With all that said, it should be kept in mind that there will be nearly 48 lakh beneficiaries who are central government employees and around 65 lakh pensioners who will benefit from this hike.
Earlier, in an attempt to bring some measure of relief to its employees, the Centre hiked the Variable Dearness Allowance (VDA). This put it in a range of Rs 105 to Rs 210 per month. The rates had been effective from April 2021. It was intended to benefit around 1.5 crore workers at the time.
All these changes come on the back of the temporary freeze of the DA that took place for around 18 months due to the Covid-19 pandemic and the impacted economy. With all the hikes that the centre was introducing, there were also a few states that increased their DA rates for their government employees. These states include Uttar Pradesh, Jammu and Kashmir, Jharkhand, Haryana, Karnataka, Rajasthan and most recently, Assam. Most of them had increased the DA for government employees by around 11 per cent.
How to Calculate the DA Hike
In the event that the government increases the DA by 3 per cent and brings it up to 31 per cent of the basic salary. Employees and pensioners simply need to find the equivalent percentage of their basic salary to get the DA amount that they would receive. For example, if an employee is paid Rs 20,000 per month, 3 per cent of that would be Rs 600 or so. Therefore, said employee would receive an additional Rs 600 on top of the basic salary of Rs 20,000 that they got. Now, considering the hike is 31 per cent, then 31 per cent of Rs 20,000 would be Rs 6,200, which is the amount the employee would get.