Dearness Allowance Hike Impact on Salary of Central Government Employees: After more than one year of the freeze on the Dearness Allowance (DA) hike, the Central Government this week (July 14) increased the Dearness Allowance (DA) rate for Central Government Employees to 28 percent from July 1, 2021. The Government had frozen the three additional installments of the DA, which were due from January 1, 2020, July 1, 2020, and January 1, 2021.
The Union Cabinet said in a statement on July 14 that the Government decided to increase the Dearness Allowance to Central Government employees with effect from 01.07.2021 to 28 percent, representing an increase of 11 percent over the current rate of 17 percent of the Basic Pay. The DA increase reflected the additional installments arising on January 1, 2020, July 1, 2020, and January 1, 2021.
How will monthly salary increase post DA hike?
The 11 percent increase in DA rate is set to put more money in the hands of Central Government Employees. However, it is to be noted that this hike would be calculated on the Basic Pay of the employees.
For example: Suppose an employee was getting Rs 100 as basic pay. The DA amount at 17 percent rate for him was Rs 17. The total DA he will get will be 28 percent of Rs 100, i.e., Rs 28.
The minimum basic pay recommended for Central Government Employees at the entry-level by the 7th Pay Commission is Rs 18,000. Till June 30, 2021, at the 17 percent DA rate, such employees were getting Rs 3060 as the dearness allowance. Now, at the 28 percent rate, they will get Rs 5040 as the dearness allowance. This amounts to a total hike of Rs 1980 in monthly in-hand salary.
The new DA rate will be applicable from July salary and lead to a significant rise in monthly in-hand pay of Central Government Employees ahead of the festival season.
Apart from DA, the Central Government has also increased the rate of Dearness Relief (DR) for Central Government pensioners to 28 percent. This will also benefit those eligible for Central Government Family pension.