The fitment factor of the government employees’ salaries is likely to be revised upwards after the Union Budget 2023, thus raising their salaries, according to media reports. The hike in the fitment factor, which is a common value which is multiplied by the basic pay to arrive at the total salary of the employees, will raise the minimum wage from Rs 18,000 currently to Rs 26,000.
The common fitment factor currently stands at 2.57 per cent. It means that if somebody, let’s say, gets a basic pay of Rs 15,500 in 4200 Grade Pay, his total pay will be Rs 15,500×2.57 or Rs 39,835. The 6th CPC had recommended the fitment ratio at 1.86.
Now, according to the reports, employees are demanding the government to raise the fitment factor to 3.68. The hike will raise the minimum wage from Rs 18,000 currently to Rs 26,000.
The Budget 2023 is set to be presented on February 1, along with the Budget Speech by Finance Minister Nirmala Sitharaman. The budget session of Parliament will start on January 31.
According to media reports earlier, central government employees under the 7th Pay Commission are also likely to get a hike in their dearness allowance (DA) in March 2023, effective January 1. The government will also raise dearness relief (DR) for pensioners. Apart from this, as per the reports, the employees are also likely to get the 18-month DA arrears.
Dearness allowance (DA) and dearness relief (DR) are revised twice a year, effective January 1 and July 1. The last hike in September, which benefitted about 48 lakh central government employees and 68 lakh pensioners, raised the DA by 4 per cent to 38 per cent. Before this, the government had raised the DA by 3 per cent to 34 per cent in March under the 7th Pay Commission.
How Does the Government Decide On DA Hike?
The government decides on the hike in DA based on the inflation rates in the country. If the inflation is high, the chances are that the DA will be hiked more. In the current scenario, in India, the retail inflation is above the RBI’s comfort zone of 2-6 per cent for the past 10 months. This may prompt the government to allow more hikes in salaries.
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.
House Rent Allowance Rules
The finance ministry recently updated the house rent allowance (HRA) rules for central government employees under the 7th Pay Commission and said they will not be entitled to HRA in cases where:
(i) He/ she shares government accommodation allotted to another government servant; or
(ii) He/she resides in accommodation allotted to his/her parents/ son/ daughter by the central government, state government, an autonomous public undertaking or semi-government organisation such as a municipality, port trust, nationalised banks, Life Insurance Corporation of India, etc; or
(iii) His/ her spouse has been allotted accommodation at the same station by the central government/ state government/ autonomous public undertaking/ semi-government organisation such as municipality, port trust, etc., whether he/she resides in that accommodation or he/she resides separately in accommodation rented by him/her.
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