The long-awaited good news for central government employees has arrived just in time for the festive season.
A substantial 4% increase in their dearness allowance (DA) was given the green light during a recent Cabinet meeting.
Effective from July 1, 2023, this hike brings the DA rate for central employees to 46%, benefiting over 48 lakh employees and roughly 65 lakh pensioners.
Payment Updates: These enhanced DA rates will reflect in the October salary, encompassing payments for July, August, and September.
The increment marks the second half of the year and raises the DA rate from 42% to 46%.
Beneficiaries: This increase in DA primarily benefits employees within the 7th Pay Commission pay band, who will also receive arrears for the months of July, August, and September, reflecting the difference between the 42% and 46% rates.
Diwali Cheer: Timed as a pre-Diwali gift, the government’s decision ensures that employees will receive the extra funds in their October salaries.
While a boon for employees, this move places an approximate financial burden of Rs 1257 crore on the government’s treasury.
Prosperous Festivals: The announcement of the DA hike in October hints at an early disbursement, aligning with the festive spirit of Diwali in November.
Additionally, adhoc bonuses and Diwali annual bonuses will be extended to railway employees, providing them with extra spending power for the celebrations.
Pensioners Benefit: Pensioners have not been left out, as they will also enjoy the same 4% increase in dearness relief (DR) from July 1, 2023. This increase results in the DR rate for pensioners reaching 46%.
Calculation Method: The 4% DA hike is determined using the formula 7th CPC DA% = [{Average of AICPI-IW (Base Year 2001=100) for the last 12 months – 261.42}/261.42×100].
According to the calculation, the DA increased by 4% from July 1, 2023, following a 4.24% increase in the AICPI-IW.
Revised DA Rate: Based on the 7th Pay Commission, the average AICPI-IW for the last 12 months stood at 382.32.
Applying the formula resulted in a total DA of 46.24%. To align with government payment practices, this increase was rounded down to 4%.
