Central government employees might be on the brink of welcoming a positive development in their financial landscape as the Centre contemplates announcing a 4% hike in dearness allowance (DA) come March 2024, according to reports from reliable sources.
A Boost in Dearness Allowance
The proposed 4% DA hike would elevate both dearness allowance and dearness relief to a significant 50%, marking a notable increase in the overall compensation for central government employees and pensioners.
Basis of Calculation
The decision on the quantum of DA and dearness relief (DR) is rooted in the All-India Consumer Price Index for Industrial Workers (CPI-IW) data. With the 12-month average of CPI-IW reaching 392.83, the DA is projected to reach 50.26% of the basic pay after the proposed hike.
Biannual Adjustment Cycle
DA and DR adjustments occur twice a year, in January and July. In the previous hike in October 2023, a 4% increase brought the DA to 46%. Given the prevailing inflation rates, the expectation is for another 4% hike in the upcoming announcement.
Beneficiaries of the Hike
Official data indicates that there are approximately 47.58 lakh central government employees and 69.76 lakh pensioners. The upcoming DA hike stands to benefit these individuals, providing financial relief in tandem with the escalating cost of living.
Formulas Governing Hike Calculations
- For Central Government Employees:
- Dearness Allowance (%) = ((Average of AICPI for the past 12 months – 115.76) / 115.76) * 100
- AICPI: All India Consumer Price Index (Base Year 2001=100)
- For Public Sector (Central Government) Employees:
- Dearness Allowance (%) = ((Average of AICPI for the past 3 months – 126.33) / 126.33) * 100
- AICPI: All India Consumer Price Index (Base Year 2016=100)
As anticipation builds, the potential DA hike aims to provide financial relief and support for central government employees and pensioners amid economic fluctuations.
