Dearness allowance (DA) hike in news again; 4% increase being expected
DA hike: Dearness allowance (DA) for central employees is expected to be raised by 4% for the six months starting January 1, some media reports said.
As per some of the report, an announcement to that effect is likely to be made in March.
If announced on expected lines, a 4% hike will take central govt staff's dearness allowance to 50%.
The last DA hike for these employees was made in October 2023. In that instance, DA was raised by 4% — taking it to 46% — w.e.f.
July 1, 2023.
DA is an amount paid to employees as part of salary to make up for inflation. When a hike is effected, it raises their salary.
Dearness relief (DR), on the other hand, is an amount paid to pensioners under the same principles.
DA is paid as a percentage of basic pay.
Dearness relief is paid as a percentage of the pension amount.
As a standard practice, dearness allowance and dearness relief are revised w.e.f. January 1 and July 1 every year.
The announcements to this effect are usually made around March and September.
It may be recalled here that the formula to calculate DA was revised in 2006. DA is now fixed based on the percentage rise in 12 monthly average of the All India Consumer Price Index (AICPI) until June 2022.
