The Union Cabinet is due to revise Dearness Allowance for the second half of this year.
The Madhya Pradesh government, on August 1, hiked the Dearness Allowance (DA) to 34 per cent from the existing 31 per cent for over 7.5 lakh government employees in the state.
That new DA for Madhya Pradesh government employees will come into effect from August 2022, and the employees will receive the enhanced amount in their September salary.
The government’s decision has been taken to make the DA at par with the central government.
The Union Cabinet is due to announce its decision on the DA for the second half of the year. The Cabinet is likely to increase the DA for all the central government employees and pensioners to factor in the increasing inflation rates since February this year and the surge in the prices of essential commodities.
This will be the second revision of DA after January. According to reports, the DA is likely to be hiked between 3 and 4 per cent.
Recent DA Hikes
The central government announced an increase in DA for all its employees in July 2021 as per the recommendations of the 7th Pay Commission. The DA was increased from 17 per cent to 28 per cent.
In October last year, the Union Cabinet approved another 3 per cent hike in DA for all the central government employees effective from July 1, 2021. After this decision, all central government employees effectively started receiving 31 per cent DA from July 1, 2021.
In January 2022, the central government decided to increase the DA by another 3 per cent, and now all the government employees have received DA at 34 per cent.
That increase in DA was per the accepted formula, which is based on the recommendations of the 7th central pay commission. For pensioners too, the dearness relief (DR) was increased by the same amount.
The cabinet notification said the term “basic pay” means the pay drawn as per the 7th pay commission matrix and does not include any other type of pay like special pay.
DA hikes benefit about 47.68 lakh central government employees and 68.62 lakh pensioners, and applicable for civilian employees and those employed in defence services.
Generally, DA is announced twice a year in January and July by the Central government. The announcement for both the revisions is generally made in March and September every year.
However, due to the coronavirus pandemic, the DA was not revised for almost 18 months after December 31, 2019.
The DA hike was stopped between January 2020 and June 2021. The DA was increased in July last year.
What is Dearness Allowance?
The Dearness Allowance is offered to central government employees to adjust to the increasing cost of living.
The DA rate is decided or revised from time to time by the centre, considering the retail inflation rates. The benefit is also applicable to central government pensioners or family pensioners.
Currently, around 47.68 lakh central government employees and 68.62 lakh pensioners are getting the benefits of the Dearness Allowance.
How much increase in salary is expected?
A central government employee with a basic salary of Rs 20,000 per month receives a DA of Rs 6,800 per the current DA rate of 34 per cent.
An increase of 4 per cent in DA, if approved by the Union Cabinet as a few reports claim, will bring another hike of Rs 800 per month for the employee. The total DA per month will reach Rs 7,600 at the hiked DA rate of 38 per cent.
An employee with a basic salary of Rs 20,000 per month will receive an annual benefit of Rs 91,200 if the DA is enhanced to 38 per cent.