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.

Written by Aanchal Magazine

New Delhi | Updated: October 19, 2023 10:14 AM IST

2 min read

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

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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.

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“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

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 a Senior Assistant Editor with The Indian Express, serving as a leading voice on the macroeconomy and fiscal policy. With over 13 years of newsroom experience, she is recognized for her ability to decode complex economic data and government policy for a wider audience. Expertise & Focus Areas: Magazine’s reporting is rooted in "fiscal arithmetic" and economic science. Her work provides critical insights into the financial health of the nation, focusing on: Macroeconomic Policy: Detailed tracking of GDP growth, inflation trends, and central bank policy actions. Fiscal Metrics: Analysis of taxation, revenue collection, and government spending. Labour & Society: Reporting on labour trends and the intersection of economic policy with employment. Her expertise lies in interpreting high-frequency economic indicators to explain the broader trajectory of the Indian economy. Personal Interests: Beyond the world of finance and statistics, Aanchal maintains a deep personal interest in the history of her homeland, Kashmir. In her spare time, she reads extensively about the region's culture and traditions and works to map the complex journeys of displacement associated with it. Find all stories by Aanchal Magazine here ... Read More

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