7th Pay Commission: Latest Update on DA Hike and 8th Pay Commission Explained

The government has changed the method for calculating the allowance as we await the second Dearness Allowance (DA) revision of the year. After revision by the Ministry of Labour and Employment, DA for central government employees and DR for pensioners won't be calculated with a new base year, according to Zee Business.

With an eye on inflation, the government regularly changes the base year. According to reports, the new formula change will affect central government employees' salaries and show itself in their wage scale.

The Union Ministry reportedly changed 2016 to be the basis year for DA calculations. The most recent Wage Rate Index series has been published. The basis year for the new series will be 2016=100, as opposed to the previous series' the base year of 1963–1965.

The National Statistical Commission (NSC) changed the base year from 1963–1965 to 2016 to enlarge the coverage and boost the effectiveness of the wage rate index. This was carried out by suggestions made by the International Labor Organization (ILO).

According to the 7th Pay Commission regulations, the DA amount is calculated using the employee's basic pay at the current rate. This calculation would be (Basic Pay x 12)/100 using the current percentage rate of 12 percent. DA Percentage is equal to 115.76 - the average 12-month CPI (Consumer Price Index). The answer will be multiplied by 100 after being divided by 115.76.

Meanwhile, the DA figure will reach 38 percent with the proposed 4% raise for central employees.

According to Chaudhary, "Dearness Allowances (DA) are paid to Central Government employees to compensate them for the erosion in the real value of their salaries as a result of inflation, and the rate of DA is periodically revised every six months based on the rate of inflation as per All India Consumer Price Index for Industrial Workers (AlCPl-LW), released by the Labour Bureau under M/o Labour & Employment.

It may not be necessary to form a new pay commission to review employee and pensioner salaries, allowances, and pensions, Chaudhary had earlier this month advised the parliament.