7th Pay Commission: Good News for Central Govt. Employees! These 4 Allowances will be Increased with DA Hike

Good news for government employees amid the record inflation as the government might increase the dearness allowance (DA) by four percent in July. The government fixes its employees’ DA twice a year, in January and July, based on the All-India Consumer Price Index (AICPI). The DA was increased by 3 percent in January after which it was increased to 34 percent.

With this additional 4 percent hike, the dearness allowance will reach 38 percent.  is brilliant news that will benefit about 1.16 crore, central employees and pensioners.

In April, retail inflation had reached a record of eight-year record. The govt increases the DA of govt employees as a relief from the rising inflation. AICPI is expected to remain above 126 in April, May, and June. In January and February, it was 125.1 and 125 while in March it reached 126. Now if the AICPI remains at this level, then the DA of central employees will increase by 4 percent.

How to Calculate the Increased Salary?

If the basic salary of an employee is Rs. 1,800 then according to the 34 percent increase in DA< they will receive DA of Rs 6,120.

If the DA increases to 38 percent, then the employee will get Rs 6840 as a dearness allowance. That is, they will get Rs. 720 more. The central government has not paid DA to its employees for 18 months i.e., between January 1, 2020, and June 30, 2021. Employees have been demanding the DA for a long time now.

The increase in DA also increases the Provident Fund and the gratuity contribution of the employee. The reason for this is that it is deducted from the basic salary and DA of the employee. The increase in DA also clears the way for increasing the transport allowance and city allowance of the employees.

There are also reports that the govt is planning to increase the HRA of central employees as well. At present, the employees are getting 27%, 18%, and 9% HRA. They are distributed based on urban, semi-urban, and rural sectors.