Centre may hike dearness allowance by 3% to 45% for its 10 mn employees

The central government is likely to increase the dearness allowance (DA) for its over ten million employees and pensioners by three percentage points to 45 per cent from the existing 42 per cent as per the agreed formula for the purpose.

The dearness allowance for employees and pensioners is worked out on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month.

The Labour Bureau is a wing of the Labour Ministry.

Talking to PTI, All India Railwaymen Federation General Secretary Shiva Gopal Mishra said, "The CPI-IW for June 2023 was released on July 31, 2023. We are demanding a four percentage point hike in dearness allowance. But the dearness allowance hike works out to be a little over three percentage points. The government does not factor in hiking DA beyond the decimal point. Thus DA is likely to be increased by three percentage points to 45 per cent".

He further explained that the expenditure department of the Finance Ministry will formulate a proposal to hike DA along with its revenue implication and will put up the proposal before the Union Cabinet for approval.

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

Presently, over ten million 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.