The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a proposal to increase the dearness allowance (DA) of the central government employees and pensioners by 4 percent.
This is the second increase in the dearness allowance of the central government employees this year. In March 2022, the government announced a 3 percent increase in DA. That increase was effective from January 1, 2022.
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Central government employees, central government pensioners, and family pensioners getting pensions from the central government will benefit from the increase in the DA.
Before the 4 percent increase approved by the union cabinet on Wednesday, the effective DA of the central government employees and pensioners stood at 34 percent. Now, this is increased to 38 percent. The new increase is effective from 1st July 2022.
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7th Pay Commission: How much salary will increase?
The 4 percent increase in DA will also have an impact on the salary of employees. If someone's salary is Rs 50,000/month and Rs 15,000 basic pay then now, with a 4 percent DA hike, will get Rs 5,700 per month, 38% percent of the basic pay (Rs 600 increase).
So, an employee who earns Rs 50,000 salary a month with Rs 15,000 as the basic pay, will see an increase in their salary by Rs 600 per month.
7th Pay Commission: What will be the impact on the government exchequer?
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be of the order of Rs 12,852.56 crore per annum and Rs 8,568.36 crore in the financial year 2022-23 (i.e. for a period of 8 months from July 2022 to February 2023).
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The additional financial implications on account of this increase of Dearness Relief to pensioners are estimated at Rs 6,261.20 crore per annum; and Rs 4,174.12 crore in the financial year 2022-23 (i.e. for a period of 8 months from July 2022 to February 2023).
7th Pay Commission: How is the DA hike decided by the government?
The DA hike is based on the percentage increase in the 12 monthly average of the All India Consumer Price Index for the period ending June 2022. The central government alters the allowances on January 1 and July 1 each year but the decision is normally announced in March and September.
