7th Pay Commission update: DA hiked by 4 percent for central govt employees, check how much salary will increase

The Union cabinet has decided to increase Dearness Allowance (DA) by 4 per cent for central government employees and pensioners, Union Minister Anurag Thakur announced on Wednesday.

Dearness Allowance (DA) is the cost-of-living adjustment allowance that the government pays to the employees of the public sector as well as pensioners of the same.

How is the DA increase calculated? 

The government usually revises the DA/DR rate every six months. This is done to compensate for the loss in purchasing power of the monthly salary/pension wealth due to inflation. The DA/DR rate benefits both Central Government employees and retirees.  

The formula recommended by the 7th Pay Commission is used to compute DA/DR. Currently, the DA is regulated and determined by the rate of inflation as measured by the All India Consumer Price Index for Industrial Workers (CPI-IW) published by the Labour Bureau (Shimla), Ministry of Labour and Employment.

CPI-IW is used to calculate DA for workers in the industrial sectors, as well as to fix and revise minimum wages in scheduled employment.

How much salary increase is expected with the next DA hike?

As the DA is hiked by 4 percent and reached 38 percent, for employees with a basic salary of Rs 18,000 now will get a hike translating to Rs 720 per month or Rs 8,640 per year.

For a basic salary of Rs 25,000, the amount will fetch Rs 1,000 more per month while Rs 2,000 monthly increase can be expected for those with a basic salary of Rs 50,000.

For a basic salary of Rs 1,00,000, the increased amount with a 4 percent hike will fetch Rs 4,000 per month or Rs 48,000 per year.