Central Government Employees Await DA Hike Announcement Amid Rising Inflation

The central government is poised to announce a hike in dearness allowance (DA) and dearness relief (DR) for its employees and pensioners, respectively, following the Union Cabinet meeting on Wednesday, October 9, 2024. This move comes as a response to the growing discontent among government employees and pensioners over the delayed announcement of the DA/DR hike.

1. Expected Hike and Its Impact

According to reports, the DA may see a 3% hike, increasing it to 53% from the current 50%. This adjustment would benefit nearly 1.15 crore central government employees and pensioners, providing a significant financial boost amid rising living costs. The previous hike was by 4%, announced in March 2024, effective from January 2024.

The DA hike is calculated based on the All India Consumer Price Index (AICPI), which tracks retail price fluctuations across various sectors of the economy. This means that any increase in DA will also lead to an equivalent increase in DR for pensioners, ensuring financial support for retired employees.

2. Historical Context and Revisions

The central government typically revises DA and DR twice a yearJanuary and Julywith official announcements usually made later. The most recent DA adjustment, a 4% increase, was announced in March 2024, effective from January 2024. Currently, central government employees receive a DA of 50% of their basic salary, while pensioners receive a DR of 50% of their basic pension.

In the past, the DA hike has been adjusted from July 1, with employees receiving three-month arrears in their October salaries. For instance, the last year's DA hike was announced in the first week of October, reflecting the arrears for the previous three months.

3. Employee and Pensioner Concerns

The Confederation of Central Government Employees and Workers has expressed concerns over the delay in the DA/DR hike announcement. In a letter to Finance Minister Nirmala Sitharaman, the confederations general secretary S B Yadav highlighted the discontent among employees and pensioners due to the delay. The letter also mentioned that with Durga Puja approaching, the PLB (performance-linked bonus) and adhoc bonus should also be declared.

The expected hike would see the salary of entry-level central government employees, who earn around Rs 18,000 per month, increase by Rs 540-720 per month. This adjustment would be effective from July 1, 2024, with the three-month arrear adjustment reflecting in the October salary.

4. Decision Making Process

The DA and DR hike are decided based on the percentage increase in the 12-month average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Although the central government revises these allowances on January 1 and July 1 every year, the decision is generally announced in March and September.

In 2006, the central government revised the formula to calculate the DA and DR for central government employees and pensioners. The formula involves calculating the average of AICPI for the past 12 months and comparing it to a base year value to determine the percentage increase.

With inflationary pressures and rising costs globally, this DA increase would help millions of employees and pensioners manage their household budgets more effectively.

The Union Cabinet meeting, chaired by Prime Minister Narendra Modi, is expected to make a decision on increasing the DA, although there is no official confirmation yet. If announced, the increase in DA and DR would provide a festive gift for government employees ahead of the Diwali celebrations.

The central government's decision on the DA hike is closely watched by millions of employees and pensioners, who are eagerly awaiting the announcement. The expected increase in DA from 50% to 53% would be a significant boost for their financial well-being.