Union Cabinet Okays 4 Per Cent DA Hike For Central Govt Employees

The central government on Wednesday declared to hike dearness allowance (DA) by 4 per cent. The decision was taken in the Union Cabinet meeting, according to news reports. The 4 per cent hike will take the DA to 38 per cent.

This is the second time in 2022 that DA has been hiked for the central government employees. The Union Cabinet in March approved to increase 3 per cent in DA under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income.

Dearness Allowance (DA) and Dearness Relief (DR) are revised on the basis of retail inflation. After remaining high for the past few months, the retail inflation stood at 6.16 per cent in June 2022, which was lower than 6.97 per cent in May 2022 but higher than 5.57 per cent in June 2021, due to lower prices food and fuel.

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The all-India CPI-IW (consumer price index for industrial workers) for June 2022 witnessed an increase by 0.2 points and came in at 129.2 points. The CPI-IW in May was 129 points.

Any changes to the DA are made as per the accepted formula, which is based on the recommendations of the 7th central pay commission to compensate for the rise in prices.

With retail inflation, or the consumer price inflation, elevated above the upper-end of the Reserve Bank of India’s target range of 2-6 per cent in each month this year, the likelihood of a bigger increase in DA was on the cards.

DA is given to government employees, while DR is for pensioners.

Over 50 lakh government employees and 65 lakh pensioners get benefitted from the DA hike.

In view of the unprecedented situation which arose due to the Covid-19 pandemic, the government also had held back three instalments of DA and DR for January 1, 2020; July 1, 2020; and January 1, 2021. In August last year, Finance Minister Nirmala Sitharaman had said the holding back of DA and DR saved about Rs 34,402 crore, in a written reply to a query in the Rajya Sabha.