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HomeBusinessHike In Dearness Allowance May Raise Salaries of Govt Employees In July

Hike In Dearness Allowance May Raise Salaries of Govt Employees In July


Government employees are expected to soon get three good news regarding their salary, going by media reports. As the dearness allowance (DA) is revised twice a year in January and July, it is set to be revised next month. Apart from DA, the employees may also get the payment of an 18-month DA arrear and interest on provident fund (PF), according to the reports.

The issue of 18-month DA arrears payment from January 2020 to June 2021 may be addressed soon and the employees of the central government may also receive Rs 2 lakh in pending arrears in one go, according to a media report. The amount of DA arrears is decided by the employees’ pay band and structure.

And, as the government as already ratified the interest rate on employees provident fund, the Employees’ Provident Fund Organisation (EPFO) will now credit interests into the accounts of PF account holders. For the financial year 2021-22, the government has approved an interest rate of 8.10 per cent on EPF.

On the DA front, as the AICPI is prevailing high, the chances of government employees getting a raise in dearness allowance is also high. DA is revised based on the changes in All India Consumer Price Index. The retail inflation in May stood at 7.04 per cent, which is above the RBI’s comfort level of 2-6 per cent.

The dearness allowance, according to media reports, is likely to be increased by a further four percent in July, which would take DA to 38 per cent.

In March, the Union Cabinet approved to increase 3 per cent in dearness allowance (DA) under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income. Over 50 lakh government employees and 65 lakh pensioners are getting profit from this move.

“The Union Cabinet chaired by the Prime Minister, Narendra Modi, has given its approval to release an additional instalment of dearness allowance (DA) to central government employees and Dearness Relief (DR) to pensioners w.e.f. January 1, 2022, representing an increase of 3 per cent over the existing rate of 31 per cent of the basic pay/ pension, to compensate for price rise,” the Prime Minister’s Office had said in a statement.

Dearness allowance is given to government employees, while the dearness relief is for pensioners.

The central government had held back three instalments of DA and DR for January 1, 2020; July 1, 2020; and January 1, 2021, in view of the unprecedented situation which arose due to the COVID-19 pandemic. Finance Minister Nirmala Sitharaman has said the holding back of DA and DR saved about Rs 34,402 crore, in a written reply to a query in the Rajya Sabha in August last year.

The central government had in July 2021 increased the DA and DR for the central government employees and pensioners, respectively, to 28 per cent from 17 per cent after a long pause. Again, in October 2021, the central government employees witnessed a jump of 3 per cent in dearness allowance.

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