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An Update From New Delhi: Central Government Employees should expect an increase in their dearness allowance to take effect in July, according to the latest information on the 7th Pay Commission. There has been no official word from the government on when the Dearness Allowance would be increased.

The current budget year will be the first time that the government has ever increased the dearness allowance. In all likelihood, workers would see a rise in income of about 3% to 4% as dearness allowance based on the All India Consumer Price Index data from April. The May and June numbers will also have an impact on how much of an uptick we see. With a positive AICPI throughout these months, dearness allowance and dearness relief might increase by 4%.

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First, let’s determine how much of an increase in the dearness allowance we may expect. Central government workers are being given a 42 percent dearness allowance. The dearness allowance for workers would climb to 46% if it were raised by another 4%. There have been claims in the media that the AICPI for the month of April is 134.2, which would translate to a DA of 45.06. A 4 percentage point increase in DA is inevitable as the index is expected to hit 46.40 in May and June.
Let’s look at how this wage hike will affect workers’ wages. At the present rate of 42 percent, an employee earning a monthly salary of Rs 18,000 would be entitled to a dearness allowance of Rs 7,560. On the other hand, if you include in a dearness allowance of 46%, it comes out to Rs. 8,280. As a consequence, there would be an increase of Rs 720 per month, or Rs 99,360 per year, in the wage.

In addition, workers may get a boost to their base pay in July, as well as the DA increase. There has been talk of a Rs. 8,000 rise in the base wage of central government workers. To put it another way, if an employee’s starting wage is Rs. 18,000, after this increase they would be making Rs. 26,000.

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