7th Pay Commission: Centre Announces 4% DA Hike, How Much Salary Hike Will Central Govt Employees Get?

7th Pay Commission: In a much-awaited bonanza for central government employees, the Union Cabinet on Wednesday approved a 4 per cent hike in dearness allowance to 46 per cent of the basic pay. The 4% DA hike, which will benefit over one crore central government employees and pensioners, will become effective from July 1, 2023.

Briefing about the Cabinet decisions today, Information and Broadcasting Minister Anurag Thakur said, “Dearness allowance for central government employees and dearness relief for pensioners have been increased by 4 per cent, effective July 1, this year. The DA has now increased to 46 per cent, from 42 per cent earlier.”

The government has also increased dearness relief (DR) by 4 per cent. DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year — January and July.

“This (4% DA hike) increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission,” the finance ministry said in a statement.

It also said the combined impact on the exchequer on account of both DA and DR would be Rs 12,857 crore per annum. This will benefit about 48.67 lakh Central Government employees and 67.95 lakh pensioners.

How Much Salary Hike Will Central Govt Employees Get?

Since the government has announced a 4 per cent DA hike, how much is the salary hike likely for central government employees? If somebody’s salary is Rs 50,000 per month and has Rs 15,000 as the basic pay. He or she currently gets Rs 6,300, which is 42 per cent of the basic pay. However, after the 4 per cent hike, the employee will get Rs 6,900 per month, which is Rs 600 higher as compared with Rs 6,300 earlier. So, if someone has a Rs 50,000 salary a month with Rs 15,000 as the basic pay, his or her salary will rise by Rs 600 per month.

In the previous DA hike in March 2023, the government had increased the dearness allowance and dearness relief by 4 per cent to 42 per cent.

Recently, various state governments, including Madhya Pradesh, Odisha, Karnataka, Jharkhand and Himachal Pradesh, increased dearness allowance for their state government employees.

How Does Govt Calculate 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.