7th pay commission: What is Dearness Allowance? Good news likely for government employees, pensioners soon

The Modi government is all set to present the Union Budget for the financial year 2023-24 on February 1 at 11 am. Prior to the budget, the centre can announce a new pay commission in this budget. The seventh pay commission was implemented eight years ago, now the government will either bring the eighth pay commission or will bring changes to the existing 7th pay commission. 

Reports suggest that a big announcement is due before the Union Budget 2023 is announced on Wednesday. various news websites are saying that a new inflation figure will be released and it will decide how much the salary of central employees and pensioners will be raised in the first half of the year. 

What is Dearness Allowance?

Dearness allowance is the fixed percentage of the basic salary. DA helps to cut down the impact of inflation. Since DA is directly related to the cost of living, the DA component is different for different employees based on their location. This means DA is different for employees in the urban sector, semi-urban sector, or rural sector.

Read: Budget 2023: Will cigarettes, tobacco products get more expensive? All about likely price hike on tobacco

Dearness Allowance: How is it calculated? 

As per the data of AICPI till November 2022, the DA of central employees can be raised by three per cent. The three percent increase in the salary of central employees is fixed if the DA index remains the same in December. On the other hand, if there is a rise of 1 point in the index, then the dearness allowance can increase by 4 per cent.

The final decision on increased dearness allowance is expected to be taken on March 1, 2023, in a cabinet meeting. If the dearness allowance is increased then from March 31, employees will get a hike in their salaries. Not only this, the money for the months of January and February will come into the account along with the arrears.

Dearness Allowance: When is DA increased? 

The dearness allowance is hiked twice a year on the basis of the ACIPI figures after a review conducted every six months. The hike in dearness allowance will be announced before Holi. 

An increase in the dearness allowance will benefit nearly 47 lakh employees and 68 lakh pensioners in the country. The government had increased DA by three per cent at the beginning of the year, after which the dearness allowance had gone up to 38 per cent. If it sees a raise by three per cent, then the dearness allowance will stand at a 41 per cent hike.