High Inflation May Result in a 4% DA Hike for Govt Employees, Will Arrears be Credited?

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DA Hike 7th Pay Commission: The government hikes the Dearness Allowance for central government employees and Dearness Relief for retired personnel twice a year, that is in January and July. Going by that norm, the government is likely to announce a DA hike for central government employees soon. As per reports quoting sources, the government will hike DA by 4 per cent to set off the impacts of inflation. DA and DR are revised on the basis of retail inflation, which has been over 7 per cent for a long time now.

How Much DA Hike is Expected?

According to a report by Zee News, the government may consider a DA hike of as much as 4 per cent in July. This means central government employees will get a DA of 38 per cent if the report is to be believed. The AICPI in January and February were 125.1 and 125, respectively, while in March it rose to 126. The AICPI in April increased to 127.7, due to the rising inflation. In May, there was a big jump of AICPI to 129. Now, if the AICPI remains to that level, DA hike of 4 per cent is likely. The CPI-based inflation in April stood at an eight-year high of 7.79 per cent. However, it cooled off to 7.01 per cent in June.

How is DA Calculated?

DA hike is only calculated on the basis of an employee’s basic salary, and the wage of the employee will be increased only based on that parameter. “The term ‘Basic Pay’ in the revised pay structure means the pay drawn in the prescribed Level in the Pay Matrix as per 7th CPC recommendations accepted by the Government, but does not include any other type of pay like special pay etc,” the Department of Expenditure (DoE) has said in the Office Memorandum (O.M.) data the last time DA was hiked.

“The Dearness Allowance will continue to be a distinct element of remuneration and will not be treated as pay within the ambit of FR 9(21),” the office memorandum further said.

Will Arrears be Credited?

The government has not commented on any update regarding the credit of arrears to central government employees. DA was frozen for more than a year by the government of India amid the Covid-19 pandemic, and since the freeze, three DA revisions were omitted. The government is unlikely to credit the DA arrears for this period, while some reports have suggested that it is under consideration. However, there is no official word regarding this.

Currently, government employees get a DA of 34 per cent on their basic salary. If the DA hike of 4 per cent is implemented, they are going to get a 38 per cent dearness allowance on top of their basic pay.

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