7th Pay Commission: DA increase announcement today? All eyes on Union Cabinet Meeting

After its cabinet meeting on Wednesday, the Centre could announce an increase in dearness allowances (DA) and Dearness Reliefs (DR) for central Government employees and pensioners.

Over one crore beneficiaries will track the likely decision, as they look for relief from rising costs ahead of Diwali.

Confederation of Central Government Employees and Workers sent a letter recently to Nirmala Sitharaman expressing concern over the delay of the DA/DR announcement. The dearness allowance is reviewed to counteract the inflation impact twice a year, usually in January and July, though official announcements are often delayed. Currently the dearness allowance is 50%. The upcoming adjustment will raise it to 53% effective July 1, 2024.

The announcement could result in a 3% rise in the DA. The new policy would take effect in October and include arrears from the three previous months (July to September).

The pattern is similar to last year, when the hike was announced at the beginning of October.

The next Cabinet meeting will see the DA increase. In a recent media report, a senior official of the Confederation of Central Government Employees & Workers said that they expect an increase of at minimum 3%.

The calculation of DA is closely tied to the All India Consumer Price Index, which tracks the retail price changes over the last 12 months. Any increase in DA will be reflected in an increase in DR. This provides financial support for retired employees. The decision is important for households across the country to manage their budgets, especially in light of global inflationary pressures.

This is a continuation of the 4% increase in March 2024 that raised the DA to 50%. The 7th Pay Commission guidelines also led to revisions of other allowances including the house rent allowance. The 7th Pay Commission was established almost a decade before and proposed automatic adjustments to basic pay when DA reaches 50%. This proposal was rejected, leading to unions planning to raise the demand with the 8th Pay Commission.