Good news for central government workers and pensioners: Potential 4% salary growth

During the festive period, the Centre is preparing to make a big statement regarding the updated Dearness Allowance (DA) and Dearness Relief (DR) for pensioners and central government employees under the 7th Pay Commission.

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According to media sources, the central government is considering a 4% increase in DA, potentially raising the current 42% to 46%. The final decision, however, will be taken by the government and depends on cabinet approval.

Though no formal statement has been issued, there is an expectation that the long-awaited announcement will be made on Wednesday, October 18.

The present DA of 42% gives a monthly increase of Rs 7,560 for persons earning a minimal basic wage of Rs 18,000 per month. With the increased DA rate of 46%, this monthly increase is expected to be Rs 8,280. As a result, individuals earning this basic wage can expect an annual income increase of Rs 8,640.

Individuals with a maximum basic salary of Rs 56,900 will see their monthly earnings increase by Rs 23,898 due to the current DA of 42%. Following the DA increase to 46%, this monthly increase is expected to reach Rs 26,174. As a result, workers with this greater base wage should expect a significant yearly salary rise of Rs 27,312.

What is Dearness Allowance?

Dearness Allowance is a wage component that is a fixed percentage of the base salary and is designed to offset the effects of inflation. Because DA is directly related to the cost of living, the DA component for different employees varies by area. This means that DA varies depending on whether a person works in an urban, semi-urban, or rural region.

How do you estimate Dearness Allowance?

Consider the following scenario: your base income is Rs.40, 000 and your DA percentage is 38%, implying that your dearness allowance is Rs.15, 200.

When Dearness allowance is raised?

To counteract the falling purchasing power of employees' salaries and pensions owing to inflation, the government revises the DA rate every six months. As a result, the DA is often amended twice a year.

The DA was last raised by 4% to 42% in March 2023, with the increased rate taking effect in January 2023.

Another 4% DA increase is scheduled to be announced soon, with effect from July 2023. If the DA increase is announced this month, it will result in higher monthly salary for central government employees beginning in November, as well as arrears from July to October.

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