DA, DR Hike News: 3% or 4% - how much Dearness Allowance hike will central govt staff get from July? Inflation data to reveal today

DA Hike, DA from July 2023, DA News, 7th Pay Commission: Some good news could be on its way for central government employees as the Consumer Price Index Numbers For Industrial Workers (CPI-IW index) for the month of March 2023 will be released today - Friday - April 28, thereby clearing the picture as to how much Dearness Aallowance (DA) / Dearness Relief (DR) hike can be expected from July onwards. The last DA hike / DR hike was only announced in March this year - but the arrears were paid from January onwards, so the release of CPI-IW data (with which DA is tethered) could indicate how much DA hike will be announced in July and the arrears for which may be paid from April onwards.  

The preparation for the calculation of the next hike in dearness allowance (DA) or Dearness relief (DR) of central employees have already begun, sources said. Provisions under the 7th Pay Commission mandate that dearness allowance be revised every 6 months. And the arreas arising from the last DA hike announced recently, will likely be disbursed to the central government staff in their salary for April 2023. However, sources have also informed that the wheels are already in motion for the next DA hike announcement for central government employees. 

The actual numbers of how much DA hike government employees will get from July 2023 will be clear from the calculations that will be announced today. It will also affect the actual quantum of dearness allowance hike that government employees get for the second-half of 2023. 

From January 1, 2023, central government employees are receiving 42% as dearness allowance (DA) / dearness relief (DR). 

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

Dearness Allowance hike: Factors that will affect DA from July 2023

The latest Consumer Price Index Numbers For Industrial Workers (CPI-IW index) is the barometer that shows the inflation of past months, thereby influencing the increase in dearness allowance. A Ministry of Labour & Employment release said that for the month of February 2023, the All-India CPI-IW had fallen by 0.1 point to 132.7 points. The data for the month of March will be released today, but the increase in the index over the past few months already suggests that central government employees can expect a DA hike between 3% to 4% from July this year. 

Sources said that even though a drop of 0.1 point was recorded in the index in February, overall it is expected to register a rise in the March data being released today. Combined with data of April, May and July inflation figures, it will likely lead to a DA hike of 3% to 4% in DA from July, sources added.

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

As per the recommendations of the 7th Pay Commission, the dearness allowance payable to central government staff from July 1, 2023 could rise by 3% to 4%. If experts are to be believed, then even if the CPI-IW index does not change in the next few months and remains stable at 132.7 points, then also there will be an DA hike of at least 3% — taking the overall dearness allowance figure to 45%.

However, experts believe that it is improbable that that CPI-IW index will remain unchanged in the coming months. And if the index registers a rise, then central government employees could even receive a DA hike of 4% from July — taking the dearness allowance to 46%.

DA Hike: How is AICPI-IW data calculated?

The Labour Bureau of the Ministry of Labour & Employment issues AICPI-IW numbers on the last working day of the following month. For instance, the index numbers for the month of March 2023, will be released on 28 April, 2023. The bureau takes note of retail prices data from 317 markets spread over 88 industrially-important centres across the country to calculate this figure. 

DA Hike: Dearness Allowance Formula 

For central government employees, the formula used to calculate dearness allowance is mentioned below —

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

For employees of Public Sector Units, DA hike is calculated by the formula mentioned below —

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