DA, DR Hike: How much Dearness Allowance will central govt employees get from July 2023? Announcement soon

DA Hike Expected in July 2023, 7th Pay Commission: The next hike in dearness allowance (DA) of central employees will likely be announced after a few months, but preparations for the DA hike announcement have already begun. As per the recommendations of the 7th Pay Commission, dearness allowance is revised every 6 months. The last DA hike had been announced recently, and the arrears from January 2023 onwards are likely to be disbursed in the April salary of central government employees, but sources say that discussions have already begun regading the next increase in DA, which will likely be implemented from July this year. However, the number-crunching and estimate of how much DA hike government employees will get in July 2023, will be clear from the calculations that are to be announced on April 28th. It will also give a broad hint as to much dearness allowance hike government employees can expect in the second-half of 2023. 

At present, 42% dearness allowance (DA) / dearness relief (DR) is paid to central government employees. 

Also Read - DA Hike Calculation: Dearness Allowance hiked from 38% to 42%; Check increase in DA of Central govt employees, pensioners

Govt hikes DA by 4 pc to 42 pc for central govt employees: I&B Minister Anurag Thakur

— Press Trust of India (@PTI_News) March 24, 2023

Dearness Allowance hike in July: Factors

Dearness allowance is revised as per the latest Consumer Price Index Numbers For Industrial Workers (CPI-IW index) of past months. The All-India CPI-IW for February, 2023 decreased by 0.1 point and stood at 132.7 points, a Ministry of Labour & Employment release said. While the data for the month of March will be released soon, sources said that the rise in the index over the past few months indicates that a DA hike of 3% to 4% may be expected in July this year. 

Although a miniscule drop of 0.1 point was recorded in February, the index is expected to record a growth in the March data releasing on April 28. And this, when combined with April, May and July inflation figures, is expected to lead to a hike of 3% to 4% in July DA review, sources added.

The inflation figure for the month of February stood at 6.16% (year-on-year) as compared to 6.16% for the month of January, and 5.04% during the corresponding month in 2022. Likewise, the data released by the Ministry showed that food inflation stood at 6.13% against 5.69% for the month of January, and 5.09% during the corresponding month in the previous year.

DA Hike: How much will Dearness Allowance increase?

Based on the calculations of the 7th Pay Commission, the dearness allowance applicable from July 1, 2023 may increase by 3 to 4%. According to experts, even if the index number does not change in the coming months and it remains at 132.7 points, there will still be an increase of at least 3% in DA. Which will lead to the dearness allowance rising to 45%.

However, reports suggest that it is improbable that that the index number will remain unchanged. And in case there is a sharp rise in the index, then we may see a DA hike of 4% in July — taking the dearness allowance to 46% from July.

DA Hike: How is AICPI-IW data calculated?

The Labor Bureau of the Ministry of Labour & Employment issues these numbers on the last working day of the subsequent month. To calculate this figure, the bureau collects data of retail prices from 317 markets spread over 88 industrially important centres in the country. The next issue of CPI-IW for the month of March 2023, will be released on Friday, 28th April, 2023.
 

DA Hike: Dearness Allowance Formula 

For central government employees, the calculation that is used to formulate the dearness allowance is —

Dearness Allowance Formula - [(Average of All India Consumer Price Index AICPI) for the last 12 months - 115.76)/115.76]×100. 

For PSU personnel, DA hike is calculated by the below mentioned formula —

For employees working in PSUs (Public Sector Units), the formula used to calculate the Dearness Allowance is - [Average of Consumer Price Index for the last 3 months (Base Year 2001 = 100)-126.33)] x100