7th Pay Commission: The central government is soon likely to announce the DA hike in the last week of September or the first week of October, according to reports. Last year, the DA hike was announced in the first week of October. However, the government is expected to announce a 3-4 per cent DA hike for central government employees with effect from July 1, 2024.

In the previous DA hike in March 2024, the central government had raised dearness allowance by 4 per cent to 50 per cent of the basic pay. The government also increased dearness relief (DR) by 4 per cent.

Dearness allowance (DA) is given to central government employees, while dearness relief (DR) is given to pensioners. DA and DR are hiked twice a year, with effect from January and July.

Will Central Govt Employees Also Get COVID-19 DA Arrears?

According to a statement by Union Minister of State for Finance Pankaj Chaudhary in the monsoon session of Parliament recently, the government is unlikely to release the 18-month arrears for DA and dearness relief (DR) that were halted during the COVID-19 pandemic.

To a question ‘Whether the government is actively considering to release an 18-month dearness allowance/ relief of central government employees/ pensioners which were withheld during COVID outbreak’, Minister of State for Finance Pankaj Chaudhary replied, “No”.

The decision to freeze three installments of DA/ DR to central government employees/ pensioners due from January 1, 2020, July 1, 2020, and January 1, 2021, was taken in the context of COVID-19, which caused economic disruption, to ease pressure on government finances.

Will DA Beyond 50% Merge With Basic Pay?

According to experts, the dearness allowance will not be merged with the basic pay in case of DA crossing 50 per cent. It will continue as it is until the 8th Pay Commission is formed. Instead of the merger, there are provisions of increasing allowances, including HRA, in case of DA crossing 50 per cent, which has already happened.

In the 4th Pay Commission, the DA had reached as high as 170 per cent.

When Will 8th Commission Be Formed?

On the 8th Pay Commission, various central government employee unions have has made demands. However, there is no proposal with the government to form the 8th Pay Commission as of now.

In a written reply in the Rajya Sabha on July 30, Minister of State for Finance Pankaj Chaudhary said, “Two representations have been received for constitution of the 8th Central Pay Commission in June 2024. No such proposal is under consideration of the government, at present.”

The 7th Pay Commission was constituted in February 2014. Its recommendations were implemented from January 1, 2016. Usually, the pay commission is constituted by the Central Government every 10 years to revise the remuneration of 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 CPI-IW. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September/October.

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.