Central government employees and pensioners can expect a bump in their paychecks following the Union Cabinet’s approval of a 4 per cent hike in dearness allowance (DA), bringing it to 50 per cent of basic salary. This increase, effective from January 1, 2024, benefits over one crore employees and pensioners.
The announcement, made in March, signifies a continuation of the biannual DA revisions based on the Consumer Price Index – Industrial Workers (CPI-IW). These revisions aim to compensate for inflation and maintain the purchasing power of salaries. In this case, the hike corresponds to a 4 per cent rise in the 12-month average CPI-IW.
The increase translates to a Rs 600 raise for an employee with a Rs 15,000 basic salary. This is because the DA hike directly affects the amount received as dearness allowance, calculated as a percentage of basic pay.
While the Commerce Minister did not confirm if the 50 per cent DA threshold would trigger a merger into basic salary, the revision will automatically lead to increases in other allowances like HRA, following the 7th Pay Commission recommendations. Additionally, employees and pensioners will receive arrears for the first two months of 2024 alongside their revised March payments.
This news is likely to be welcomed by central government employees, particularly in light of rising living costs. The announcement is also expected to prompt similar DA revisions for state government employees.