The Cabinet Committee on Economic Affairs (CCEA), led by Prime Minister Narendra Modi, is poised to make a significant decision today regarding a potential 4% hike in dearness allowance (DA) for central government employees, according to reliable sources.
Approval Expected Today
Insiders suggest that the CCEA is likely to grant approval to the proposed 4% increase in dearness allowance, a move eagerly awaited by a large section of central government employees. This approval would bring the total dearness allowance and dearness relief to 50%, providing relief to the workforce in the face of rising inflation.
Biannual Hikes in DA and DR
The dearness allowance and dearness relief are subject to biannual revisions, effective from January and July each year. The central government determines the quantum of the hike based on the All-India Consumer Price Index for Industrial Workers (CPI-IW) data.
The 12-month average of the CPI-IW currently stands at 392.83, indicating that the dearness allowance will amount to 50.26% of the basic pay after the proposed 4% hike.
Context of Previous Hike
In the last revision in October 2023, the dearness allowance witnessed a 4% increase, bringing it to 46% of the basic pay. Given the prevailing inflation rate, the upcoming hike is anticipated to mirror the previous one, maintaining a 4% increase.
In Shorts, the potential approval of a 4% DA hike today by the CCEA would be a welcome development for central government employees grappling with the impact of inflation on their finances.
