7th Pay Commission: Govt Employees May Get A Boost In Salary In Next Year ; DA Hike, Arrears, Fitment Factor

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Central government employees are likely to get good news related to their salary in the new year 2023. The government is, according to media reports, expected to take decisions on three issues — DA and DR hike, fitment factor revision, and clearing 18-month DA arrears. All these three decisions will fetch a bonus for government employees.

Dearness allowance (DA) and dearness relief (DR) are revised twice a year, effective January 1 and July 1. The last hike, which benefitted about 48 lakh central government employees and 68 lakh pensioners, raised the DA by 4 per cent to 38 per cent. Before this, the government had raised the DA by 3 per cent to 34 per cent in March under the 7th Pay Commission.

DA Hike In 2023

Going by the media reports, the DA and DR will be raised by 3-5 per cent in March 2023, effective January 2023. With this hike, the DA will increase up to 43 per cent.

18-Month Arrears

Apart from this, the issue of 18-month DA arrears payment from January 2020 to June 2021 may be addressed soon. The employees may get the payment of an 18-month DA arrear. The amount of DA arrears is decided by the employees’ pay band and structure.

Fitment Factor To Be Revised

Employee unions have been demanding the revision of fitment factor in their salaries. The fitment factor is a common value which is multiplied by the basic pay to arrive at the total salary of the employees. Currently, the

common fitment benefit for all groups of central government employees is 2.57. Now, if somebody is getting a basic pay of Rs 15,500 in 4200 Grade Pay, his total pay will be Rs 15,500×2.57 or Rs 39,835.

The 6th CPC had recommended the fitment ratio at 1.86. Now, employees are demanding the government to raise it to 3.68, according to media report. The hike will raise the minimum wage from Rs 18,000 currently to Rs 26,000.

How Is DA Hike Decided?

The government decides on the hike in DA based on the inflation rates in the country. If the inflation is high, the chances are that the DA will be hiked more. In the current scenario, in India, the retail inflation is above the RBI’s comfort zone of 2-6 per cent for the past 10 months. This may prompt the government to allow more hikes in salaries.

The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.

In March, the Union Cabinet had approved to increase 3 per cent in DA under the 7th Pay Commission, thus taking the DA to 34 per cent of the basic income. In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.

Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.

For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.

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