Good news is coming soon for millions of employees and pensioners of the central government. It is expected that before the festival of Holi, the government can announce a 4% increase in dearness allowance (DA) and inflation relief (DR). If this happens, the total dearness allowance of central employees will increase from the current 46% to 50%.
How is the dearness allowance fixed?
Actually, dearness allowance is given to government employees and pensioners to help in dealing with increasing inflation. It is calculated on the basis of the latest Consumer Price Index (AICPI-IW) for industrial workers, which releases the figures of Labor Bureau every month. According to the AICPI-IW data up to December 2023, the DA is considered to be almost fixed by 4%.
What will happen when there is 50% DA?
According to the rules, when the dearness allowance reaches 50%, it is reduced to zero and its amount is added to the basic salary of the employees. This means that if DA is 50%, the basic salary of employees may increase significantly. In addition, when the DA is 50%, the house rent allowance (HRA) is also likely to increase. The rates of HRA are 27%, 18% and 9% respectively for X, Y and Z category cities, which can increase to 30%, 20% and 10% when DA is 50%.
How long can the announcement be made?
Usually the central government amends the DA twice a year (in January and July). The DA Hike, which comes into force from January 2024, is prone to the announcement of Holi in March. This decision will directly benefit about 50 lakh central employees and 68 lakh pensioners, which will increase their month’s salary and pension. This increase will definitely bring a big relief for them during the festive season.
