Centre likely to hike dearness allowance to 45%; to be effective from July 1

Central government employees and pensioners will likely enjoy 45 per cent dearness allowance (DA) soon, up from the existing 42 per cent.

DA is worked out based on the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out every month by the Labour Bureau, which is a wing of the Labour Ministry. The CPI-IW for June 2023 was released on July 31, All India Railwaymen Federation General Secretary Shiva Gopal Mishra told PTI.

“We are demanding a four percentage point hike in dearness allowance. But the dearness allowance hike has worked out to be a little over three percentage points. The government does not factor in the decimal point. Thus, DA is likely to be increased by three percentage points to 45 per cent,” he explained.

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

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

The last DA revision was done on March 24, 2023, and was effective from January 1, 2023. The Centre 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.

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The DA is provided to employees and pensioners to compensate them for rising prices. The cost of living increases over time and is reflected through CPI-IW. The allowance is revised periodically twice a year for the over one crore central government employees and pensioners.

(With agency inputs)