Decoding the DA hike for government employees

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The central government on July 14 restored the increase in dearness allowance and dearness relief for central government employees and pensioners. The DA will now be 28% from the existing 17%. The government has restored three installments of DA/DR which fell due on January 1, 2020 (4%), July 1, 2020 (3%) and January 1, 2021 (4%). The hike will be effective July 1, 2021.

The current rate of DA is 17% and the increase of 11% makes its 28%. It may be noted here that no decision has been taken on the arrears due from January 1, 2020.

The total burden on the government to fund this increase will be around Rs 34,000 crore.

In simple terms, it means that an employee with a basic salary of Rs 20,000 is at present getting Rs 3,400/ as DA. With this hike to 28%, the DA would rise to Rs 5,600, an increase of Rs 1,800 per month. This in effect means an increment of 11% for the employees and pensioners.

The following figures will illustrate the hike at different pay levels. These are not actual pay grades.