Dearness Allowance News: Ahead of DA hike announcement, AICPI-IW data registers a rise of 1.7% — Here's why it matters

Consumer Price Index for Industrial Workers, Dearness Allowance Hike, 7th Pay Commission, Latest News: The government decides on the dearness allowance (DA) or the dearness relief (DR) hike of the central government employees based on the inflation figures — namely, the All-India Consumer Price Index for Industrial Workers (AICPI-IW) data that is released every month. The AICPI-IW data for each month is released after one month, and the data for the month of June was released at the end of July. While the DA hike figures will likely be announced by next month, the related consumer price figures announced recently will play a major role in the dearness allowance figures.

According to a statement shared by the Labour Bureau of the Ministry of Labour & Employment, the CPI-IW data for the month of June 2023 showed a spike of 1.7 per cent, in comparison to May 2023. And the figures showed that with this increase, the index has risen to 136.4. As per the official release, the index was affected mostly by inflation in food and beverages. On 1-month percentage change, it increased by 1.26 per cent with respect to previous month compared to increase of 0.16 per cent recorded between corresponding months a year ago.

Dearness Allowance Hike News: Current DA Figures

Presently, 42 per cent of basic pay or pension is paid as Dearness Allowance (DA) or Dearness Relief (DR) to central government staff and pensioners. The latest rise in AICPI-IW data indicates that the government employees can expect an increase in the Dearness allowance or Dearness Relief, keeping in line with the inflation figures.

There are speculations that the central government staff and pensioners may receive a 3 per cent or 4 per cent DA, DR hike, however, the government sources have made it clear that no such decision has been made so far. And the final announcement of the DA hike will likely come by month. 

Dearness Allowance Hike News: How is DA hike calculated?

The government revises Dearness Allowance (DA) or Dearness Relief (DR) rates for the Central Government Employees and Pensioners on a half-yearly basis. As of now, the 7th Pay Commission's recommendations are taken into account to calculate DA/DR and salary and pension for employees and pensioners. And the AICPI-IW data and the inflation figures largely influence the DA hike decision. 

As per the official release, the next issue of AICPI-IW for the month of July 2023 will be released on 31st August, 2023.