7th Pay Commission: What is Dearness Allowance (DA) and Will Central Employees Get Hike in October 2024?

Dearness Allowance is an integral part of the pay scale for central government employees in India. The calculation is based on a percentage of base salary. The situation varies from region to region. After a 4% increase from January 1, 2024, the cost currently reaches 50% of the basic salary.

DA may be raised in October 2024

Central government employees are waiting for another DA silence, which is usually checked every six months. Media reports said that following the general trend of implementing changes before major festivals such as Diwali, the government may announce an additional increase of 3 to 4 per cent from October 2024. If the salary income is Rs 18,000, an increase of 3% will increase the salary by Rs 540. A 4% increase would take the price to Rs 7,205.

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The DA formula is based on the AICPI, which takes the average of the past 12 months and ensures that each raise reflects current economic conditions15. Since the salary increase ratio has not yet been officially announced, employees and pensioners still have high hopes and look forward to the latest news from the government. DA Central Government Employees Basic Salary Consolidation Has Significant Implications. The following is a brief overview of the possible impact of this merger and the current situation.

Learn about mergers

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Definition of DA: Dearness Allowance is a cost of living adjustment given to government employees, defined as a percentage of the basic salary. The aim is to minimize the discriminatory impact of inflation on the cost of living.

Merger Threshold: In the earlier remuneration committees, it was stipulated that if the DA exceeds 50% of the basic salary, then the DA can be merged with the basic salary. What will happen in this case is that the DA will be considered as part of the salary structure and all subsequent percentage calculations for DA will be zeroed out at this point.

Historical perspective: Previously merged with base salary. However, the same merger took place in 2004 only for the fifth remuneration committee. Subsequently, other committees, including the 6th Pay Commission, did not automatically provide for the merger but said the pay would change once the DA crossed a certain criteria. percentage and is also not consolidated with base salary24.

current situation

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No automatic merger: Although DA has reached 50% so far, experts confirm that it will not automatically merge with Basic Pay. The Seventh Pay Commission did not agree to this merger and therefore allowed the allowances related to DA to increase under dearness allowance and other allowances and the basic salary to remain unchanged unless the government scheme changes.

Impact on allowances: There is no doubt that the merger of DA with basic salary cannot happen overnight, but some allowances linked to DA will still go up after crossing the 50% mark. Housing, children’s education, transportation, etc.

Future developments: While the government may have the idea of ​​a merger in a future update, an official statement on the matter is expected. Employees expect that as the cost of living increases, so will their compensation and overall benefits.

Acquiring DA at base salary may ensure a more stable salary structure and may better reflect inflation adjustments. However, the current guidelines of the 7th Remuneration Commission do not explicitly consider the 50% threshold for automatic merger. Relevant subsidies will instead increase as a result of this adjustment.

Source: https://dinhtienhoang.edu.vn
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