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

DA Hike, Dearness Allowance Calculation: The long-drawn wait for central employees is finally over, as the Central Government has announced a hike of 4% in Dearness Allowance on Friday. 

Union Minister Anurag Thakur was quoted saying that DA has been hiked by 4% to 42% for central government employees. 

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

The official notification said: "Cabinet has today approved the release of an additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners, due from 1st January 2023. This will benefit 47.58 lakh employees and 69.76 lakh pensioners."

As of now, all central government employees and pensioners were being paid DA and DR at the rate of 38% under the 7th Pay Commission. However, as the 4% DA Hike has now been notified, this amount will increase to 42%.

As per sources, dearness allowance will be paid at the rate of 42% in March salary and arrears of 2 months — January and February 2023 — will also be disbursed. 

Central government employees can calculate the increase in their salary according to their basic pay and grade after the DA hike.

DA Hike: How much will Dearness Allowance increase?

As per sources, the incremented DA will be paid along with the salary for the month of March 2023. As known to all, dearness allowance is calculated only on the basic salary. 

For example, if a government employee's salary is Rs 20,000, then after a 4% DA hike, their salary now increases by Rs 800 a month.

DA Hike: Dearness Allowance Formula 

Formula used to calculate the dearness allowance hike of central government employees:

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

Formula for calculating DA hike of PSU personnel:

Now, if we talk about the Dearness Allowance of people working in PSUs (Public Sector Units), then the method used to calculate is -

Dearness Allowance Percentage = [Average of Consumer Price Index for the last 3 months (Base Year 2001 = 100)-126.33)] x100

According to the 7th Pay Commission matrix, there will be a massive increase in the salary of the officer grade. 

DA Hike: How much will pension increase?

If the basic pension of a pensioner is Rs 31,550.

Then, Basic Pay - Rs 31,550 

Dearness Allowance (DA) paid so far - 38% - Rs 11,989/month 

New Dearness Allowance (DA) every month - 42% - Rs 13,251/month

As the Dearness Allowance (DA) increases by 4%, there will be an increase of Rs 1262/month in salary.

DA Hike: Dearness Alowance arrear will likely be disbursed alongwith the increase in DA 

Along with the announcement of Dearness Allowance / Dearness Relief (DR) hike, two months' arrears will also be paid.

This will likely include payment of increased DA for January 2023 and February 2023.

That is, an additional payment of Rs 1262 + Rs 1262 will be made along with the salary / pension for March 2023.

Dearness Allowance Hike: Calculation at 42% DA

After the 4% Dearness Allowance hike announced today, the total DA figure has risen to 42%. 

If calculated in the maximum salary range, then the total annual dearness allowance on the basic salary of Rs 56,900 will be Rs 2,86,776.

Those falling in this pay grade will get Rs 2,276 more as DA, than the current rate.

Their monthly DA amount will rise to Rs 23,898 with this DA hike announcement.

Dearness Allowance Hike: Read Full Notification

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today has given its approval to release an additional instalment of Dearness Allowance to Central Governments employees and Dearness Relief to Pensioners with effect from 01.01.2023.  The additional instalment will represent an increase of 4% over the existing rate of 38% of the Basic Pay/Pension, to compensate against price rise.

The combine impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.12,815.60 crore per annum. 

This will benefit about 47.58 lakh Central Governments employees and 69.76 lakh pensioners.

This increase is in accordance with the accepted formula which is based on the recommendations of the 7th Central Pay Commission.

(With inputs from Shubham Shukla)