DNA Explainer: What is DA hike and how it benefits government employees? Know increased salary

7^th pay commission update: The Centre on Friday made a big announcement regarding the Dearness Allowance (DA) of central government employees, revealing that the DA hike of 4 percent has been approved leading to an increase in the salary of these employees.

The Union Cabinet, in a meeting, announced that they have approved the first DA hike of 2023, which means that the dearness allowance of central government employees is now set at 42 percent, raised from the previous 32 per cent.

The official notification issued by the Centre reads, “The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today has given its approval to release an additional instalment of Dearness Allowance to Central Governments employees and Dearness Relief to Pensioners with effect from 01.01.2023.  The additional instalment will represent an increase of 4% over the existing rate of 38% of the Basic Pay/Pension, to compensate against price rise.”

What is DA hike? Know its benefits

The DA hike is a major move for central government employees and will lead to a rise in their salaries in the future. The DA hike helps government employees combat inflation and keep up with the rising prices, according to the government.

The Dearness Allowance is a part of the salary component of the government employee in India to mitigate the impact of inflation on people. This means that the DA percentage of an employee is raised on the basis of the inflation rate in the country.

For those who are central government employees, every time the DA or Dearness Allowance is hiked or improved, it improves their monthly salary and adds to their basic salary component.

Salary increase due to DA hike

The DA per cent for central government employees is calculated using the formula ((Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76) *100. For public sector (central government) employees, the formula is ((Average of AICPI (Base Year 2016=100) for the past 3 months -126.33)/126.33) *100.

According to the above-mentioned formula, the DA hike and raised salary can be calculated. This means that if the person has a salary of Rs 60,000, they will see an increase in their salary by Rs 2,400 due to the 4 per cent DA hike.

READ | 7th Pay Commission big update: 4 percent DA hike approved for central government employees