Before Holi, the Modi government can give a big gift to its more than one crore central employees and pensioners. Dearness Allowance (DA) for these employees can be increased from the existing 38 percent to 42 percent.
Before Holi, the Modi government can give a big gift to its more than one crore central employees and pensioners. Dearness Allowance (DA) for these employees can be increased by four percent to 42 percent from the existing 38 percent. A formula has been agreed upon for this purpose.
Explain that keeping in mind the rising inflation, dearness allowance is increased. It is decided twice a year. The DA of state government employees is increased by the respective governments at their own level. After the high inflation last year, many states including Gujarat and Madhya Pradesh had increased the DA of their employees.
Shiv Gopal Mishra, general secretary of the All India Railwaymen’s Federation, told PTI, “The CPI-IW for December 2022 was released on January 31, 2023. The increase in dearness allowance works out to 4.23 per cent. But the government does not take decimals into DA. In such a situation, there can be an increase of four percentage points in DA. It can be increased from 38 percent to 42 percent.
He informed that the Department of Expenditure of the Finance Ministry will make a proposal to increase DA. In this, its revenue effect will also be told. This proposal will be placed before the Union Cabinet for approval. The increase in dearness allowance will be applicable from January 1, 2023.
Dearness allowance calculation:
For central government employees: The DA is calculated as — {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months -115.76)/115.76} x 100.
For central public sector employees, the DA is calculated as — {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 3 months -126.33)/126.33} x 100.
Last year, in September, the government raised DA by 4%, taking the rate to 38% with effect from July 1, 2022. This was an increase from 34% between January to June 2022.
If DA is hiked to 42%, then employees’ dearness allowance on their salary will also jump. Notably, DA is different depending upon the level of the pay matrix of an employee. The higher your pay matrix, the higher is DA!
For example:
Level 1 grade pay:
For instance, the basic salary under level 1 of the 1800 grade pay scale for employees, is ₹18,000 per month.
With DA at 42%, the dearness allowance would come at ₹7,560 on the mentioned salary (42% of 18,000 pm).
At 38%, the dearness allowance comes around to ₹6,840 (38% of ₹18,000 pm).
This would be an increase of ₹720 in dearness allowance at 42%.
Level 9 grade pay:
Under level 9 of 5400-grade pay, the basic salary is ₹53,100 per month. At 42%, the dearness allowance would be ₹22,302 on this basic salary, while at 38% — it would be ₹20,178.
Hence, DA will rise by ₹2,124 from January 1, 2023, compared to the dearness allowance received between July 1, 2022, to December 31, 2022.
The Labour Ministry revises DA in view of the inflation of many important things in the AICPI (All India Consumer Price Index) index.
At present, India’s inflation is at 5.72% in December 2022, becoming the second month in a row when CPI has stayed below RBI’s upper tolerance limit of 6%. This is the lowest reading in CPI since December 2021. CPI was above RBI’s tolerance limit from January 2022 to October 2022 before easing.
