The central government is expected to announce a 3-4% dearness allowance (DA) hike for its employees, effective from July 1, 2024. According to reports, the announcement is likely to be made either in the last week of September or early October. This follows the trend of previous DA hikes, with the most recent one occurring in March 2024, where DA was increased by 4%, bringing it to 50% of basic pay.
No Release of COVID-19 DA Arrears
Despite demands for the release of arrears for the 18-month period during which DA hikes were frozen due to the COVID-19 pandemic, the government has made it clear that no such arrears will be disbursed. Union Minister of State for Finance, Pankaj Chaudhary, confirmed during the monsoon session of Parliament that the government is not considering releasing these arrears. The freeze was implemented during the pandemic to ease pressure on government finances.
Impact of DA Crossing 50%
Once the DA crosses 50%, many central government employees expect that it will be merged with their basic pay. However, experts have clarified that this will not happen under the current regulations. Instead of merging with the basic pay, allowances such as House Rent Allowance (HRA) will increase. This scenario has already taken place, with DA reaching 50%, but the next major change would only occur with the formation of the 8th Pay Commission.
8th Pay Commission: No Plans Yet
There has been no official proposal to form the 8th Pay Commission, despite demands from various employee unions. According to the government, no proposal is under consideration at present. The 7th Pay Commission was established in February 2014, and its recommendations were implemented from January 1, 2016. The next pay commission is typically constituted every 10 years to review the pay structure for government employees.
How DA Is Calculated
The DA hike is based on the percentage increase in the 12-month average of the All-India Consumer Price Index for Industrial Workers (CPI-IW). The government revises DA and Dearness Relief (DR) twice a year, in January and July, though announcements are typically made in March and September/October.
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