7th Pay Commission: Central Government Employees May Get Hike in DA & 4 Other Allowances

At a time when the central government employees are eagerly waiting for the Dearness Allowance hike, few media reports are claiming that four additional allowances that are based on the DA level may also increase. If this happens then lakhs of government employees working under different departments will get huge benefits.

Now let’s talk about the four other allowances that may also be hiked;

1. The DA is derived from the base pay. As a result, an increase in DA will also increase the monthly provident fund (PF) for employees of the central government

2. As a result of the increase in DA, employee gratuity amounts will also rise.

3. The increase in the dearness allowance may also hike the employees' travel/transport allowance and city allowance.

4. The government could be considering raising the HRA in light of the government's decision to raise the DA, according to media reports.

What is the latest update on the DA hike?

Although thousands of central government employees are eagerly awaiting the news of the Dearness Allowance (DA) increase, certain media reports indicate that it may happen shortly. The most recent All-India CPI-IW data for May is what gives rise to this more optimistic outlook.

The AICP Index, a key component in calculating the DA, shows that an increase in the DA of the central government is likely in May. In July, the government might have more good news to share with the workforce. Now, if recent media reports are to be accepted, the employees' dearness allowance may increase by 4%. This suggests that the overall DA could be as high as 38%.

Employees of the central government have their Dearness Allowance updated twice a year. While the second is offered from July to December, the first is offered from January to June.

In April 2022, the All-India CPI-IW rose by 1.7 points to 127.7. According to data from the Ministry of Labour & Employment, the 1-month percentage change climbed by 1.35 percent compared to the 0.42 percent increase between the same months a year before.

According to the most recent ministry reports, the AICPI figures for May are at 129, which suggests with certainty that the DA would be higher than anticipated, or 6 percent, according to multiple media websites.

In March, the first dearness allowance rise for the year 2022 was announced. The AICPI value in December 2021 was 125.4. But it dropped to 125.1 in January 2022, a 0.3-point fall.

In February 2022, the All-India CPI-IW dropped 0.1 points to 125.0. In terms of a 1-month percentage change, it fell by 0.08 percent from the previous month, compared to a gain of 0.68 percent between similar months a year earlier. There was an increase of 1 point for March. 126 is the AICPI index value for March.

You may recall that the Union Cabinet increased the Dearness Allowance (DA) and Dearness Relief (DR) on March 30 to account for the price increase, benefiting more than 1.16 crore central government employees and retirees. The increases ranged from 3% to 34%.

The additional payment will start to be due on January 1, 2022. The rise follows the approved formula, which was developed based on the suggestions made by the 7th Central Pay Commission.