7th Pay Commission: More Salary Hike For Employees Likely In July As DA To Be Hiked 4%; New Formula

7th Pay Commission Update: After a 4 per cent hike in DA for central government employees recently effective January 1, the government is likely to raise the dearness allowance by another 4 per cent in July this year, according to media reports. DA and DR are revised twice a year — January and July. The reports also said that the DA hike is likely to be based on a revised formula for calculation.

Dearness allowance is given to government employees, while the dearness relief is for pensioners.

According to the media reports, the labour ministry revised the DA calculation formula and changed the base year of dearness allowance in 2016 and released a new series of Wage Rate Index (WRI-Wage Rate Index). The ministry said the new series of WRI with base year 2016=100 replaced the old series of the base year 1963-65.

How DA is Calculated Currently?

The central government revises the DA and DR for employees based on a formula. Following is the formula:

Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.

For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.

How Much Has Salary Increased After Recent 4% DA Hike?

The 4 per cent hike in DA and dearness relief (DR) will increase the salary of 47.58 lakh central government employees and pension amount for 69.76 lakh pensioners. The DA is given to employees based on the basic pay of the employees.

For example, if a government employee’s monthly take-home salary is about Rs 42,000 and the Basic Pay is around Rs 25,500; then he/ she must be getting Rs 9,690 as the dearness allowance. Now, this DA amount will increase to Rs 10,710 after the latest 4 per cent DA hike. So, there will be an increase of Rs 1,020 in monthly take-home salary in this case.

The previous revision in DA was done on September 28, 2022, which was effective from July 1, 2022. The Centre had increased DA by four percentage points to 38 per cent based on the percentage increase in the 12-month average of the All India Consumer Price Index for the period ending June 2022.

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

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