Lakhs of Government employees may get a hike in their dearness allowance (DA) which will be announced next month, i.e. in July 2022. The DA is announced twice a year – in January and in July.
It is being speculated that due to a rise in retail inflation, Government may factor that in the DA amount for July 2022.
The announcement regarding DA is normally made in March and September every year. However for one-and-a-half years after December 31, 2019, no hike or change was effected in the DA amount due to Coronavirus pandemic.
The Finance Ministry had stopped the DA hike from January 2020 until June 30, 2021, due to the Pandemic. The DA hike restarted in July last year.
Subsequently, on the basis of the 7th Pay Commission’s recommendations, DA for all Central Government employees was hiked in July 2021 to 28 per cent from 17 per cent.
Later in October 2021, DA was again hiked by more than three times and the increased amount also became effective from July 1, 2021.
Due to these two hikes, from July 1, 2021 itself, all Government employees had started receiving DA at the rate of 31 per cent.
After that on January 1, 2022 also, a three-time hike in DA was announced, after which Government employees have been receiving DA at 34 per cent rate.
Now, whatever hike the Central Government will implement in DA, it will come into effect from July 1, 2022 onwards. All Central government employees as well as pensioners will also get arrears due to them from July 2022 till the period the hike in DA comes into effect.
If this hike is three times, then on the basis of the recommendations of the 7th Pay Commission, on a basic pay of Rs 18,000, there will be a hike of Rs 540 in DA. If the basic pay is Rs 25,000 then the DA hike will be Rs 750 per month, while those having Rs 50,000 basic pay, will get a DA hike of Rs 1,500 per month.
In addition to the hike in DA, government employees this time around may also get a hike in their basic pay with the inclusion of the fitment factor, as there are speculations that Government may also soon approve a hike in the fitment factor.
Employees’ unions have long been demanding that the fitment factor be increased from 2.57 times to 3.68 times.
If this demand of theirs is accepted, then the minimum wage or basic pay of Central Government employees will also increase from Rs 18,000 to Rs 26,000.
Earlier the Government had increased the salary at the entry-level in 2017. At that time, the basic salary had been hiked from Rs 7,000 to Rs 18,000.
So if the fitment factor is hiked, Central Government employees may also get a hike in their basic pay in July along with an enhanced DA.
What is the fitment factor?
Fitment factor is a figure used by the 7th Central Pay Commission (CPC) with which the basic pay in the 6th Central Pay Commission regime (Pay in Pay band + Grade pay) is multiplied to fix basic pay in the revised pay structure (7th CPC).
The fitment factor formulated by the 7th Central Pay Commission is 2.57.
Quantum of increase expected after fitment factor hike
If the fitment factor is increased, then the employees’ salary can go up significantly.
Let us take an example to illustrate this. Suppose the Government increased the fitment factor to 3.68 times as per the demand; the employees’ minimum wage will be Rs 26,000.
After adding all the allowances on the basic pay of Rs 18,000, as per the 2.57 fitment factor (18,000 * 2.57 = Rs 46,260), the salary will go up to Rs 46,260. If the fitment factor is 3.68, then the salary will rise to Rs 95,680 (26,000 * 3.68 = Rs 95,680).