7th Pay Commission Update: Modi government is considering to soon announce an increase in Dearness Allowance (DA) for all central government employees and pensioners. According to media reports, the central government may announce DA increase between Navratri and Diwali. Whenever the government announces the increase in dearness allowance, the increase in DA will be considered effective from July 1, 2023.
How much increase is expected in DA?
According to experts, the government can announce an increase in DA by up to 4%. However, it is possible that this figure may increase further. The government increases dearness allowance from time to time to help government employees and pensioners cope with inflation. At present, central government employees and pensioners get 42% dearness allowance. Therefore, DA is expected to increase to 46% after the revision. If this happens then 46% DA will be considered applicable from July 1, 2023.
When does the government increase DA?
The government revises DA in January and July. However, this time there is a slight delay in announcing the increase in DA. The first week of October has started. Now the big question is what is the formula to calculate the increase in DA for government employees and pensioners?
DA for central government employees is calculated on the basis of the latest Consumer Price Index for Industrial Labor (CPI-IW). If we look at the CPI-IW base year 2001=100 from July 2022 to June 2023, the average of AICPI-IW over the last 12 months is 382.32.
7th CPC DA% = [{Average of AICPI-IW (base year 2001=100) for last 12 months – 261.42}/261.42×100] =[{382.32-261.42}/261.42×100] = 46.24
If the average CPI-IW of last 12 months was 382.32, then DA as per this formula will be 4624%. When DA increases, the salary of central government employees increases.
If DA increases by 4%, how much will your salary increase?
For example, suppose a central government employee gets a basic salary of Rs 38,500 every month. His DA at 42% was Rs 16,170. Now if DA increases by 4% from July 2023, then the individual’s DA will increase to Rs 17,710. His salary will increase by Rs 17,710 – Rs 16,170 = Rs 1,540 every month.
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