Year Ender 2021: Key 7th Pay Commission, DA, pension decisions for Central government employees

In one of the major decisions, the central government this year hiked the Dearness Allowance  (DA) of the central government employees to 31 per cent. It was increased to 28 per cent before 1 July and later to 31 per cent. The government increased the DA by 11 per cent, which was due from January 1, 2020, July 1, 2020, and January 1, 2021. 

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The arrears of Dearness Allowance and Dearness Relief (DR) between January 2020 and June 2021 are still to be paid by the government.  

"....the Dearness Allowance payable to central government employees shall be enhanced from the existing rate of 28 per cent to 31 per cent of the basic pay with effect from July 1, 2021," the expenditure department of the finance ministry said in an office memorandum on October 25.

The above hike came just days before Diwali.

Dearness Allowance is paid by the government to its employees as well as a pensioner to mitigate the impact of inflation. The effective salary of government employees requires a periodic increase to help them cope up with the increasing prices. Meanwhile, DR is the same allowance but given to the pensioners.

In another news, the central government made changes in the manner in which the dearness allowance is calculated. The formula for calculating Dearness Allowance has been revised by the Central Government's Ministry of Labor and Employment. This was reported by our sister concern Zee News.

In 2016, the base year for Dearness Allowance was revised. A new series of Wage Rate Indexes has been produced by the government (WRI-Wage Rate Index). According to the Labor Ministry, the new WRI series, with a base year of 2016=100, will replace the existing series, which had the base year of 1963-65. That is, the manner of calculating the dearness allowance is changing currently, the Zee News report said.