7th Pay Commission: Will the government give a shock before the 8th Pay Commission? It was presumed that the government would likely raise the dearness allowance within the range of 3 to 4 percent in March. However, If the government decides to follow the media reports, then the increase in Dearness Allowance (DA) will be restricted to 2 percent before Holi.
February is hopeful for an increase in DA
DA was adjusted in February for workers of the central government by 3%. In October, it was expected to be raised from 50% to 53%, though 55% has been suggested. An additional 2% is expected by January as inflation rates rise. What remains to be seen is how DA compares to further economic indicators. Combined with the expected pension adjustments, there should be a lift in standards of living. It will be confirmed if the meeting chaired by PM Narendra Modi will mark July 2024 as the meeting when the four percent increase was put into motion and further forecast put into place.
How much will the salary increase due to DA hike?
If there is a 2% increase in DA, then the salary of an employee with a basic salary of Rs 18,000 will increase by Rs 360 per month. If the total salary of an employee is Rs 30,000 and his basic salary is Rs 18,000, then he currently gets 53% DA i.e. Rs 9,540. But after a 2% increase, he will get Rs 9,900 per month, which will be Rs 360 more. If DA is increased by 3%, then DA will increase by Rs 540 to Rs 10,080 per month.
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How is DA decided?
Dearness Allowance (DA) and Dearness Relief (DR) are calculated based on the average increase in the All India Consumer Price Index (AICPI) of 12 months. The central government revises DA every year on January 1 and July 1, but it is usually announced in March and September.
In 2006, the central government adopted a new formula for calculating DA and DR.
Formula to calculate DA percentage
Dearness Allowance (DA) percentage = ((Average of All India Consumer Price Index (AICPI) of last 12 months – 115.76)/115.76) × 100
8th Pay Commission
In January 2025, the Central Government announced the 8th Pay Commission, which will revise the salaries and pensions of government employees. The period of the 7th Pay Commission is ending this year. However, the terms of reference (ToR) of the new Pay Commission and its members have not been announced by the government yet. The 8th Pay Commission will be implemented in 2026, as the period of the 7th Pay Commission is ending on 31 December 2025.
