Government decision to hike dearness allowance by 3% to 45% is expected soon

According to the agreed-upon formula for the purpose, the central government is likely to raise the dearness allowance (DA) for its more than one crore employees and pensioners by 3%. The total DA for government employees and pensioners will increase from the current 42% to 45% with the most recent increase. The increase in DA will follow the Labor Bureau’s monthly release of the Consumer Price Index for Industrial Workers (CPI-IW), which measures consumer prices for industrial workers.

Government employees are compensated by the Central Government with DA in order to offset inflation or price increases. Periodically, the allowance is adjusted to reflect increases in the cost of living as determined by the CPI-IW.

As per All India Railwaymen’s Federation General Secretary Shiva Gopal Mishra, “The CPI-IW for June 2023 was released on July 31, 2023. We are asking for a 4% point increase in the dearness allowance. However, the increase in the dearness allowance amounts to just a little bit over three percentage points. The government does not account for increases in DA after the decimal point. As a result, DA is likely to rise by three percentage points to reach 45%.

He continued by saying that the Finance Ministry’s expenditure division would draft a proposal to raise the Daily Allowance (DA) along with its revenue implications and submit it for approval to the Union Cabinet.

The hike in DA will take effect on July 1, 2023. The current dearness allowance is 42% for the more than 1 crore central government employees and pensioners.

The most recent DA revision was completed on March 24, 2023, and it took effect on January 1, 2023.

Based on the percentage increase in the 12-month average of the All India Consumer Price Index for the period ending December 2022, the Centre increased DA by four percentage points to 42 percent. Employees and pensioners receive the DA as a price-inflation benefit.

Over time, the cost of living rises and is reflected in the CPI-IW. Twice a year, the allowance is adjusted periodically.