3% Hike in Dearness Allowance by Centre

The central government is likely to increase the dearness allowance (DA) for its employees and pensioners by three percentage points. The current DA rate is 42%, and it is expected to be raised to 45%.

The DA is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW) released by the Labour Bureau monthly.

The All India Railwaymen Federation demanded a four percentage point increase, but the government typically rounds it down to the nearest whole number.

The proposal for the DA hike, along with its financial implications, will be presented to the Union Cabinet for approval. The revised DA is expected to be effective from July 1, 2023.

Currently, over one crore central government employees and pensioners receive a 42% dearness allowance.

The last revision in DA was implemented on January 1, 2023, with a four percentage point increase based on the 12 monthly average of the All India Consumer Price Index ending in December 2022.

The purpose of the DA is to compensate employees and pensioners for the impact of inflation, and it is revised twice a year based on changes in the CPI-IW.

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The DA hike will be effective from July 1, 2023.

Presently, over one crore central government employees and pensioners are getting a 42 per cent dearness allowance.

The last revision in DA was done on March 24, 2023, and was effective from January 1, 2023.

The Centre had increased DA by four percentage points to 42 per cent based on the percentage increase in the 12 monthly average of the All India Consumer Price Index for the period ending December 2022.

The DA is provided to employees and pensioners to compensate them for rising prices.

The cost of living increases over a period of time and is reflected through CPI-IW. The allowance is revised periodically twice a year.

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