Dearness allowance (DA) is provided to central government employees, while dearness relief (DR) is given to pensioners.
7th Pay Commission DA Hike: Following the introduction of the Unified Pension Scheme (UPS), central government employees are set to receive another benefit this month—a hike in dearness allowance (DA). According to sources, the central government is likely to announce a DA increase of 3-4 percent in the third week of September 2024.
In the previous adjustment made in March 2024, the government had increased the DA by 4 percent, raising it to 50 percent of the basic pay. At the same time, dearness relief (DR) for pensioners was also increased by 4 percent.
Dearness allowance (DA) is provided to central government employees, while dearness relief (DR) is given to pensioners. These are revised twice annually, effective from January and July.
During the recent monsoon session of Parliament, Union Minister of State for Finance Pankaj Chaudhary addressed the issue of DA and DR arrears that were frozen during the COVID-19 pandemic. The decision to freeze three installments of DA/DR—due from January 1, 2020, July 1, 2020, and January 1, 2021—was made to alleviate the financial pressure on the government during the economic disruption caused by the pandemic.
When Will the 8th Pay Commission Be Formed?
Various central government employee unions have raised demands for the formation of the 8th Pay Commission. However, the government currently has no plans to establish the next commission.
In a written reply to the Rajya Sabha on July 30, Minister of State for Finance Pankaj Chaudhary confirmed that two requests for the creation of the 8th Central Pay Commission were received in June 2024, but the government is not considering such a proposal at this time.
The 7th Pay Commission was established in February 2014, and its recommendations were implemented starting from January 1, 2016. Typically, the Central Government forms a pay commission every 10 years to review the salaries of government employees.
How does the government calculate the DA hike?
The DA and DR hikes are determined based on the percentage increase in the 12-month average of the All-India Consumer Price Index for Industrial Workers (CPI-IW). While the government revises these allowances every year on January 1 and July 1, the official announcements generally occur in March and September/October.
In 2006, the central government revised the formula for calculating DA and DR for government employees and pensioners.
For central government employees, the DA percentage is calculated as:
Dearness Allowance Percentage = \((Average of All-India CPI (Base Year 2001=100) for the past 12 months - 115.76) / 115.76\) x 100.
For Central Public Sector employees, the formula is:
Dearness Allowance Percentage = \((Average of All-India CPI (Base Year 2001=100) for the past 3 months - 126.33) / 126.33\) x 100.
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