7th Pay Commission: Govt likely to announce 5% hike in dearness allowance

7th Pay Commission: Govt likely to announce 5% hike in dearness allowance; to reflect in October salaries

The central government employees, who were left disappointed by Finance Minister Nirmala Sitharaman’s maiden Budget, are likely to receive a big bonanza ahead of the coming festive season. These employees were expecting a positive announcement on their long-pending demands of a hike in minimum pay and fitment factor beyond the recommendations of the 7th Central Pay Commission (CPC) in the Union Budget 2019, but to no avail. As compensation, the much-speculated 5 per cent hike in Dearness Allowance (DA) for the July-December 2019 period may now come through as an early Dussehra gift.

DA for the second half of 2019 is expected to increase to 17 per cent and the central government employees can expect this hike to reflect in their October 2019 salaries. If this comes to pass, it will be the biggest hike since the implementation of the 7th CPC recommendations in 2016. DA is a cost of living adjustment allowance – adjusted in line with inflation to compensate for price rise – that is calculated as a fixed percentage of a person’s basic salary or pension. It is pegged to the All India Consumer Price Index (Industrial Workers). India, Pakistan and Bangladesh are reportedly the only countries where government employees are given such an allowance.

“The July 2019 DA is yet to be announced but as per the AICPI data, the DA hike is likely to be 5 per cent in H2 [second half] 2019,” Harishankar Tiwari, ex-president, AG Office Brotherhood, told the portal, adding the hike was unlikely to be delayed any further. In June 2019 the AICPI stood at 316, which is two points higher than May 2019 AICPIN.

Back in February, when the AICPIN stood at 307, the Centre had hiked DA by 3 per cent to the current 12 per cent, with retrospective effect from January 1, 2019. Previously the DA was increased by 2 per cent in the Union Budget 2018 when the AICPI was 301. Experts believe if the index increases by two points in a month, the revised DA comes around 16-17 per cent.

In addition, central government employees that fall under the government’s risk category may also be looking at a special allowance, as recommended by the 7th CPC. Earlier this month, the Centre issued a notification to ascertain the number of employees that are eligible for the risk and hardship allowance of up to Rs 25,000 per month, depending on the department and employee’s length of service. The government has sought the list of eligible employees by August 20.

Source : Business Today