Recently under the 7th Pay Commission the Modi government hiked the long-awaited Dearness Allowance (DA) and Dearness Relief (DR). This raise of 3% in DA and DR is a gift from Diwali for around one crore central government employees and pensioners.
The new minimum shall be effective from July I, 2024 and the increased remunerations will appear in the October payroll as well as arrears for July, August and September.
Analyzing DA and successive definitizations: What is Dearness Allowance (DA)?
DA or Dearness Allowance, is thus a part of the salary that is paid specifically for bearing additional cost due to inflation to a government employee. It is expressed in percentage of the basic wages and has two revisions each year in January and July. The latest increase takes the DA to 53 percent. Before that in early March 2024 a DA increase of 4 percent was implemented to make it 50 percent.
Arrears for Three Months
As a result of the new 3% implemented in the DA, employees will also enjoy arrears for July, August, and September 2024. This means that apart from the October salary, the employees will receive the extra DA for the three months, which will be delightful for them during the festive season.
How is DA Calculated?
DA is determined in relation to the basic pay. For instance, to a basic wage earner, a basics salary of ₹ 30,000, a 3% DA up gradation means he will take home ₹ 900 more. If last total salary was ₹55,000 including basic salary, HRA and DA the new amount would be ₹55,900.
Difference Between DA and DR
Whereas, the active employee of the central government gets Dearness Allowance (DA), pensioner receives Dearness Relief (DR). Both are intended to protect against inflation that has a growth of allowances done bi-annually so that the beneficiaries can at least keep abreast with price hikes.
Impact of the Hike
This 3% increase in DA will translate into about ₹14,000 crore additional burden for the government. But the same is believed to usher improvements in the economic standards of the worker and pensioner during the festive periods. This increase will possibly enable their spending budgeting and daily expenses.
Government’s Plans For The Future
This is in line with the government’s paradigm shift to enhance the DA as part of measures to offset the financial uncertainties facing its employees and pensioners. This is true in earlier forecast of March 2024 and present measures to try to cope with rising prices. These polices are important for the public servants and other pensioners in order to be able to survive with dignity.
