49.18 lakh employees and 67.95 lakh pensioners to benefit
4% benefit to cost Rs.12,868.72 crore per annum to exchequer
The Union Cabinet chaired by Prime Minister Shri Narendra Modi approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1.1.2024 representing an increase of 4% over the existing rate of 46% of the Basic Pay/Pension, to compensate against price rise.
The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.12,868.72 crore per annum. This will benefit about 49.18 lakh Central Government employees and 67.95 lakh pensioners.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.
How is dearness allowance calculated for central government employees?
How is DA Calculated: Centre announced a four per cent increase in Dearness Allowance and Dearness on Thursday. With this hike, central government employees and pensioners will get 50 per cent DA of their basic salary.
There was also a 25 per cent increase in transport allowance, deputation allowance, and canteen allowance.
Apart from that, House Rent Allowance (HRA) has also been raised for different categories from 27 per cent to 30 per cent, from 19 per cent to 20 per cent, and from 9 per cent of the basic pay to 10 per cent.
Amid the news that will give relief to crores of central government employees, here is how DA is calculated for central government employees.
How is DA calculated?
The DA is calculated as a percentage of an employee’s basic salary. Depending on inflation, it is adjusted twice a year.
DA is calculated on the basis of the consumer price index (CPI) and industrial average.
When we calculate DA on the basis of CPI, we first determine CPI. The CPI is published by the Labour Ministry of the central government.
DA calculation for Central government employees
Dearness Allowance % = ((Average of AICPI (Base Year – 2001=100) for the past 12 months -115.76)/115.76) *100
For central public sector employees
Dearness Allowance % = ((Average of AICPI (Base Year – 2001=100) for the past 3 months -126.33)/126.33) *100
Here, AICPI is All-India Consumer Price Index