Mahima Chaudhary | Updated: Aug 17, 2022 23:27 IST
The government has announced the 7th Pay Commission Update DA-DR to increase by 4%. The total dearness allowance of central employees has increased from 34% to 38% following a 4% increase in DA. But before that know what Dearance Allowance is:
Dearness allowance (DA) is an amount paid to Government and private sector employees and pensioners to help with the cost of living by providing funds for those who rely on them. DA was first introduced in India in 1972. Following this, the Central Government began providing dearness allowance to all government employees. DR stands for Dearness Relief and is intended for retired military personnel. DA and DR are updated twice a year, in January and July. The 7th Pay Commission DA updates have been announced recently.
Retail-inflation industrial workers are used to revising DA and DR. In June 2022, retail inflation for industrial workers was 6.16 percent, compared to 6.97 percent in May 2022 and 5.57 percent in June 2021. This was due to lower food and gasoline prices. The all-India CPI-IW (Consumer Price Index for Industrial Workers) increased by 0.2 points to 129.2 points in June 2022. In May, the CPI-IW was 129 points.
The government has announced the 7th Pay Commission Update DA-DR to increase by 4% central employees’ DA updates. The total dearness allowance of central employees has increased from 34% to 38% following a 4% increase in DA. This government decision will benefit over one crore central employees and pensioners.
This revised dearness allowance will be reflected in the September 2022 salary as per the 7th Pay commission latest updates. However, the increased DA was implemented in July, which means that arrears for the months of July and August will also be paid.
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With an eye on inflation, the government changes the base year on a regular basis. According to the 7th Pay commission latest updates, the new formula change will affect the salaries of central government employees and will be reflected in their wage scale.
According to reports, the Union Ministry changed 2016 as the base year for DA calculations. The most recent Wage Rate Index series is now available. The new series’ basis year will be 2016 = 100, as opposed to the previous series’ base year of 1963-1965.
To broaden the coverage and improve the effectiveness of the wage rate index, the National Statistical Commission (NSC) changed the base year from 1963-1965 to 2016. This was done in accordance with International Labor Organization (ILO) recommendations.
The DA amount is calculated using the employee’s basic pay at the current rate, according to the 7th Pay Commission regulations. This calculation would be (Basic Pay x 12)/100 Using the current annual percentage rate of 12%, The DA percentage equals 115.76, which is the average 12-month CPI (Consumer Price Index). The answer will be multiplied by 100 after dividing by 115.76.
Meanwhile, with the proposed 4% raise for central employees, the DA figure will rise to 38%.
Central government employees are paid in accordance with the recommendations of the 7th Central Pay Commission, which are now in effect. Central government employees have complained that their pay is lower than the 7th Pay Commission’s recommendations. They benefit from the salary components, but they receive a lower salary.
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The Dearness Allowance is a cost-of-living adjustment allowance provided by the government to public sector employees and pensioners.
The revised dearness allowance will be reflected in the September 2022 salary.
For Dearance allowance calculations, the base year has been changed to 2016.
It increased from 34% to 38% as per the latest updates.
Government announces 7th Pay Commission Update DA-DR To Increase By 4%, as a result, central employees will receive a raise of 4%.