7th Pay Commission Big Update: Govt. Plans to Hike DA of Govt Employees to 42%

7th Pay Commission Update: The Center is expected to increase the dearness allowance (DA) for its more than one crore employees and retirees by four percentage points to 42 per cent from the existing 38 per cent as per the agreed-upon formula for the purpose, which is ostensibly good news for central government employees.

In accordance with a report by PTI, the DA increase will take effect on January 1 of this year. The latest Consumer Price Index for Industrial Workers (CPI-IW), released each month by the Labour Bureau, a division of the Labour Ministry, serves as the basis for calculating the Daily Allowance (DA) for employees and retirees.

The labor Ministry hikes DA given the inflation of numerous essential items in the AICPI (All India Consumer Price Index) index.

Based on the percentage increase in the 12-month average of the All-India Consumer Price Index for the period ending June 2022, the Centre hiked DA by four percentage points to 38%.

On January 31, 2023, the CPI-IW for December 2022 was published. The increase in the dearness allowance amounts to 4.23 percent. DA increases above the decimal point are not taken into account by the government. DA is therefore anticipated to rise by four percentage points to 42%. According to Shiva Gopal Mishra, general secretary of the All-India Railwaymen Federation, PTI.

Mishra went on to say that the Ministry of Finance's spending division would draught a proposal to increase DA along with the revenue implications and submit it for approval to the Union Cabinet.

Recently, 38% of DA was paid to more than one crore retirees and workers of the central government. The most recent change to the DA was made on September 28 of last year, and it became effective on July 1, 2022.

Employees and pensioners receive the DA as a price-inflation benefit. Over time, the cost of living rises and is represented in the CPI-IW. Twice a year, the allowance is adjusted periodically.