DA Calculator: Dearness Allowance hiked by 4% to 46% — Check how much DA/DR, arrear will Central Govt employees, pensioners get

DA Hike Expected in October 2023, 7th Pay Commission: There's very good news in store for central government staff who have been eagerly waiting for the (DA) or Dearness Relief (DR) hike announcement! The Central Government has announced a 4 per cent DA/DR hike for central government employees in a press conference today (Wednesday, October 18) — which increases the overall DA to 46 per cent. While making the DA hike announcement, Union Minister Anurag Thakur said, "Union Cabinet has hiked DA by 4 percentage points to 46 per cent for central government employees." 

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Union Cabinet hikes DA by 4 percentage points to 46 per cent for central govt employees: I&B Minister Anurag Thakur

— Press Trust of India (@PTI_News) October 18, 2023

The hike in Dearness Relief will be due from July 1, 2023, and as a result of this 48.67 lakh Central Government Employees and 67.95 lakh pensioners will benefit from this decision.

Wheels were in motion for the second half's announcement ever since the DA hike for H1 was announced was announced by the Central Government in March. The DA hike of 4 per cent — increasing the dearness allowance figure from 38 per cent to 42 per cent — was announced by Union Minister Anurag Thakur on March 24, 2023.

DA Hike: From when will Dearness Allowance Hike be paid? 

Until now, 42 per cent dearness allowance (DA) / dearness relief (DR) was being paid to central government employees. And, after the 4 per cent DA hike announcement by the Central Government today — this figure has risen to 46 per cent.    

With the DA hike announced for the Central Government employees, the arrears from July 2023 onwards will also likely be disbursed with October salary.

The arrear payment will be done the on the basis of the percentage hike announced — for example - 4 per cent arrear will be paid, after the 4 per cent DA hike announcement.

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

Dearness Allowance hike in October: What affects DA Hike?

The calculation of Dearness Allowance is done with regards to the Consumer Price Index Numbers For Industrial Workers (CPI-IW index) of the corresponding months. As per sources, the rise in the index over the past few months had indicated that a DA hike of 4 per cent was expected by the Central Government employees in October this 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 will increase by 4 per cent. According to experts, even if the CPI-IW index numbers do not change in the upcoming reviews, the inflation figures of over 6 per cent was enough to lead to the dearness allowance being hiked to 46 per cent, say experts.

DA Hike: How is AICPI-IW index calculation done?

The Ministry of Labour & Employment's Labour Bureau announces the Consumer Price Index Numbers For Industrial Workers for the previous month - on the last working day of the next month. The Labour Bureau calculates the index number after collecting retail prices data from 317 markets from 88 industrially important centres in India. 

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

DA Hike: What is Dearness Allowance?

Dearness allowance is paid to central government employees and pensioners in order to compensate them for rising prices. The rise in the cost of living over time is reflected through CPI-IW, and bearing this in mind, the dearness allowance or dearness relief is revised periodically twice a year.

Also Read - DA Hike: What is dearness allowance? Who are its beneficiaries? How does a DA hike impact Central government employees?