Diwali Bonanza: Govt Announces 3% DA Hike, How Much Will Salary of Central Govt Employees Increase?

7th Pay Commission: In a festival bonanza, the central government on Wednesday announced a 3 per cent hike in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, with effect from July 1, 2024, announced Union Information & Broadcasting Minister Ashwini Vaishnaw. After the latest decision, the DA has been increased from 50% to 53%.

The decision, which was taken on Wednesday in a Cabinet meeting headed by Prime Minister Narendra Modi, will benefit over one crore central government employees and pensioners (49.18 lakh central government employees and 64.89 lakh pensioners).

Briefing about the Cabinet decision today, Union Information & Broadcasting Minister Ashwini Vaishnaw said, “It will have a financial implication of Rs 9,448 crore for the central exchequer.”

Also Read: Diwali Bonanza: Govt Announces 3% DA Hike, How Much Will Salary of Central Govt Employees Increase?

The government has also increased dearness relief (DR) by 3 per cent for pensioners. DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year, with effect from January and July.

In the previous hike in March 2024, the central government had raised dearness allowance by 4 per cent to 50 per cent of the basic pay. The government also increased dearness relief (DR) by 4 per cent.

How Much Salary Hike Will Central Govt Employees Get?

Since the government has announced a 3 per cent DA hike, how much is the salary hike likely for central government employees? If somebody’s salary is Rs 30,000 per month and has Rs 18,000 as the basic pay, he or she currently gets Rs 9,000 as dearness allowance, which is 50 per cent of the basic pay.

However, after the latest 3 per cent hike, the employee will now get Rs 9,540 per month, which is Rs 540 higher. So, if someone has around Rs 30,000 salary a month with Rs 18,000 as the basic pay, his or her salary will rise by Rs 540 per month.

How Does Govt Decide on the DA Hike?

The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.

In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.

Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.

For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.