Will The DA For Central Govt Employees Be 30% From July 1? 

With the second wave of the pandemic showing signs of ease down, the meeting convened by the Cabinet Secretary today may decide lifting of the freeze order on payment of dearness allowance and dearness relief (for pensioners).

As per the Union Finance ministry Order number No. 1/1/2020-E- II(B) notified on April 23 last year ---

"in view of the crisis arising out of COVID-19, it has been decided that the additional instalment of Dearness Allowance payable to Central Government employees and Dearness Relief to Central Government pensioners, due from 1st January 2020 shall not be paid. The additional instalments of Dearness Allowance and Dearness Relief due from 1st July 2020 and 1st January 2021 shall also not be paid."

However, in the same official order, the Union Finance Ministry has clearly mentioned -----

" As and when the decision to release the future installment of Dearness Allowance and Dearness Relief due from 1st July 2021 is taken by the Government, the rates of Dearness Allowance and Dearness Relief as effective from 1st January 2020, 1st July 2020 and 1st January 2021 will be restored prospectively and will be subsumed in the cumulative revised rate effective from 1st July 2021. No arrears for the period from 1st January 2020 till 30th June 2021 shall be paid." 

An official release of the National Council of JCM – Staff Side indicates that a decision with regard to lifting of the freeze on DA will be taken on June 26 meeting. 

A look at the freeze order of the Union Finance ministry in 2020 hints that the Centre may not be going to restore the DA hike for the Central government employees  since January 2021. It seems, in all likelihood, the DA hike will be effected from July 1, so that employees in the Central government sector will draw an increased salary on July 31. 

How Much The DA Instalment Will Be?

The Dear Allowance for the central govt employees are linked to the Consumer Price Index (CPI) for Industrial Workers (IW) released every month by the Labour Bureau. Recently, the base year of the CPI-IW has been changed to 2016 (means the year has been fixed as the reference year with assignment of a value of 100,any  increase in the value of CPI-IW hereafter will be added thereon. For example, if the CPI-IW index rose by 10 points then the next value will be 110).

The new base year has been implemented from September 2020. Till that month, the base year had been 2001.

Since the DA is calculated by taking into the average of CPI-IW for the last 12 months from the due date of announcement (DA has been declared twice in a year - January and July), the index values from January 2020 will be considered. The value between January and August 2020 (base year 2001=100) had risen from 330 t0 338.

From September 2020, the new reference year has come into effect. The all-India CPI-IW in Sept was 118.1 and it gradually has risen to 120.1 in April. The index for May is due for release on June 30.

Therefore, as per the DA calculation formula, the DA from July 1 will be 30 per cent of their basic salary. Before the freeze order, the DA had been 17 per cent.    

A total of around 52 lakh Central government employees and over 65 lakh pensioners will stand benefitted by the decision of the Centre to de-freeze the grant of additional DA.