What DA hike means for govt employees, the exchequer

The dearness allowance for employees and pensioners is estimated on the basis of the latest Consumer Price Index for Industrial Workers, which is released by the Labour Bureau every month.

The hike will benefit about 48.67 lakh central government employees and 67.95 lakh pensioners. (File picture for representation)

Listen to this article

00:00

1x 1.5x 1.8x

The Union Cabinet Wednesday approved a 4 percentage point hike in dearness allowance (DA) and dearness relief for central government employees and pensioners to 46 per cent from 42 per cent, Union Minister for Information and Broadcasting Anurag Thakur said. Thakur said the hike would be effective July 1, adding it was meant to benefit government employees and pensioners amid the festive season.

Outgo for the exchequer

With this hike, the total outgo for the exchequer would be Rs 12,857 crore per year, the Minister said after a meeting of the Cabinet Committee on Economic Affairs (CCEA). This will benefit about 48.67 lakh central government employees and 67.95 lakh pensioners, an official statement said.

Also in Explained | After four sluggish months, why are corporate revenues seeing a pickup — and will this sustain?

“This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” the statement said.

Pay Commission formula

Story continues below this ad

The dearness allowance for employees and pensioners is estimated on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW), which is released by the Labour Bureau every month.

The last revision in DA was done on March 24, 2023, and was effective from January 1, 2023. The Centre had increased the DA by four percentage points to 42 per cent based on the percentage increase in the 12-monthly average of the All India Consumer Price Index for the period ending December 2022. DA is provided to government employees and pensioners factoring in the rising prices and the cost of living.

On Tuesday, the government announced the grant of non-productivity linked bonus (ad-hoc bonus) to eligible employees for the year 2022-23. The ad-hoc bonus has been approved for Group C and non-gazetted Group B rank officials, including paramilitary forces. The calculation ceiling for payment of ad-hoc bonus under these orders has been kept at Rs 7,000.

Aanchal Magazine

Aanchal Magazine is Senior Assistant Editor with The Indian Express and reports on the macro economy and fiscal policy, with a special focus on economic science, labour trends, taxation and revenue metrics. With over 13 years of newsroom experience, she has also reported in detail on macroeconomic data such as trends and policy actions related to inflation, GDP growth and fiscal arithmetic. Interested in the history of her homeland, Kashmir, she likes to read about its culture and tradition in her spare time, along with trying to map the journeys of displacement from there. ... Read More

Among dead in Vijay rally stampede, young mother, couple set to marry

Cities2 hr ago

A rally by actor-politician Vijay in Velusamypuram ended tragically with 40 deaths in a stampede. Non-political workers gathered to see the superstar, but exhaustion, heat, and poor planning caused chaos. People collapsed, ambulances couldn't reach, and police presence was inadequate. Vijay's team ignored instructions, and the narrow roads and insufficient crowd control added to the tragedy.

View all shorts

More Explained

Karur crush death toll mounts: What leads to stampedes, why India sees so many of them