DA For Central Govt Employees Raised: Check Salary Hike As Per 7th Pay Commission Calculation

Good news soon on the horizon for over 50 lakh central government employees and over 60 lakh pensioners! The Centre is likely to formally announce the lifting of the DA and DR freeze today. As per sources in NCJCM, the DA hike has been approved by the Cabinet Committee on Economic Affairs (CCEA).

Significantly, last year on April 23, the Union Finance ministry vides its Order number No. 1/1/2020-E- II(B) had notified the freezing of the DA and DR for central government employees and pensioners. Some excerpts of the order are cited below.

"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."

As per NCJCM (National Council of Joint Consultative Machinery), when the freeze order was notified, the DA rate had been 17 per cent. But the CCEA has raised the DA to 28 per cent today.

"The Department of Expenditure notification has only mentioned of not paying the arrears due from 1st July 2020 to 1st Jan 2021. But the same order has clearly stated that the rates of DA and DR for the period of 1st Jan 2020, July 1, 2020 and Jan1, 2021 will be restored prospectively," said NCJCM sources.

The excerpts are cited below.

" As and when the decision to release the future instalment 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."

Given the clear cut DoE order, with the de-freezing of DA and DR, and with the rise in the rate of DA to 28 per cent, the total effective DA and DR rate in July will rise to 31 per cent.

DA Calculator

As per the formula of DA calculation in 7th Pay Commission, the per cent value is calculated by taking the average of consumer price index - industry workers for the last 12 months (means up to June as DA is usually announced in July and up to December if announced on January) subtracted from a value of 115.76 and divided by the same value.

So, as per the DA calculator, the rate of rise from the 1st Jan, 2020 - Jan 30, 2021, has been 17%+4%+3%+4%, which then equals to 28 per cent, the rate which the CCEA has approved today, as per NCCM sources.

Since the DA will be calculated till Jun 30, 2021, the calculator shows the rise will be around 3 per cent, (though the June AICPI-IW will be released on July 31, 2021) The AICPII-IW for May had been released on June 30, where the AICPI-IW increased by 0.5 points to touch 120.6.

How Much Will The Salary Rise?

• If drawing minimum grade pay of 1800, then the minimum salary as per the 7th CPC is Rs 18,000.
• In case Rs 18,000, then rise in DA for the first six months has been 4 per cent, next six months it will be 7 per cent and for the last six months. The cumulative value then comes at around11 per cent (as the DA has been pending for the period of January 2020).
• Therefore, the salary jump will be - Rs 23,760.  Post the addition of 3% rise in June 2021 rise, the total rise will then be - Rs 24, 472
• Similarly, if in the pay band of Rs 5,200 - 29,200, if an employee is having grade pay of Rs 2800, then the hiked salary h/she will draw amounts to Rs 36,692

Now, calculate your salary hike as per the formula and the pay grade you are in.