7th Pay Commission: Check Latest Updates on DA Hike, Fitment Factor, and 18-Month DA Arrears

The central government employees could get a hikein their salary in 2023. Media reports say that after the government will soon make a definitive decision regarding the three issues— DA and DR raise, the fitment factor revision, and the clearing of 18-month DA arrears for central government employees.

The salary of central govt employees will be influenced by all three of these factors. On January 1 and July 1 of each year, the dearness allowance (DA) and dearness relief (DR) are updated. The most recent increase raised the DA by 4% to 38%, benefiting roughly 48 lakh central government employees and 68 lakh retirees. Prior to this, as part of the 7th Pay Commission, the government increased the DA by 1% to 34% in March.

Is there a DA Hike coming in 2023?

Media reports state that the DA and DR would increase by 3-5% in March 2023, starting in January 2023. This increment will cause the DA to increase by up to 43%.

Updates on the 18-month DA arrears:

It may not take long to find a solution for the 18-month DA arrears payment from January 2020 to June 2021. An 18-month DA arrear may be paid to employees; the amount depends on their pay band and structure.

Latest updates on the fitment factor:

The employees' unions have been pushing for a change to the fitting factor that determines their salaries. A fitment factor is a common number that is added to the employee's base pay to produce their total pay. All categories of central government employees currently receive a common fitment benefit of 2.57.

How is DA Hike calculated?

The government decides DA hikes according to the nation's inflation rate. The DA will most likely be increased further if inflation is high. Retail inflation in India has exceeded the RBI's target range of 2 to 6 percent for the last ten months. This might influence the government to approve further pay raises.

The percentage increase in the All-India Consumer Price Index (AICPI) 12-month average for the fiscal year ending June 2022 is used to calculate the DA and DR increases. Despite the fact that the central government reviews the allowances twice a year on January 1 and July 1, the decision is often made public in March and September.

According to the 7th Pay Commission, the Union Cabinet approved a 3% rise in DA in March, making it 34% of the basic income. In 2006, the central government revised the formula used to calculate DA and DR for retirees and employees of the central government.