E-Paper
DA for Centre’s pensioners and employees raised by 4%. How it is calculated
Another important rule to be kept in mind while calculating the dearness allowance is that the hike in DA is not infinite and is capped at 50% of an employee is basic salary.
The central government hiked the dearness allowance for central government employees and pensioners by 4% on Friday in a measure that is likely to bring cheer to about 48 lakh employees and 65 lakh pensioners, who will now be paid the increased amount in arrears from January 2021. Here’s how calculation for DA is made
DA is essentially a raise given twice a year to offset against inflation. Since inflation impact on people in different geographic locations is not the same, the allowance given by the government is also divided into three groups classified as urban, semi-urban and rural.
Another important rule to be kept in mind while calculating the dearness allowance is that the hike in DA is not infinite and is capped at 50% of an employee is basic salary. It gets merged with the basic salary once it reaches that limit thus providing for a steady rise in government employees’ basic salary.
The seventh pay commission had also recommended that in case of retired government servants, their pension will not be deducted from their consolidated pay. The consolidated pay package will be raised by 25 percent as and when Dearness Allowance goes up by 50 percent.
The formula as per the 7th pay commission that came into effect in 2016 is as follows
For Central government employees
% of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months -115.76)/115.76} x 100
For central public sector employees
% of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 3 months -126.33)/126.33} x 100
The rate of inflation considered for the calculation is based on the All India Consumer Price Index for industrial workers issued by the labour bureau in Himachal Pradesh.
