7th Pay Commission: How much salary, pension hike will central government employees get?

Dearness Allowance (DA) and Dearness Relief (DR), banned amid the Covid-19 pandemic are going to be restored after 18 months. The ban led to a freeze that halted three installments of January 2020, July 2020 and January 2021. With the fourth installment right around the corner in the month of July 2021, the central employees would get the benefit of 4 salary increments.

Percentage increase in salary and pension after DA freeze has been removed. Central employees and pensioners get DA/DR twice a year to cushion the impact of inflation. It is based on the Consumer Price Index (CPI). Dearness Allowance is announced in the month of January and July.

See how much DA rose in the last 18 months.

Receiving 17% DA from January 2020 because the increment was left behind.

4% (held back) in January 2020 – 17% + 4% = 21%

3% (held back) in July 2020 – 17% + 4% +3 % = 24%

4% (held back)in January 2021 – 17% + 4%+3 % +4 % = 28%

July 2021 (estimated DA) 4% i.e.  17% + 4%+3 % +4 % + 4% = 32%

Money in your wallet

DA/DR is calculated on the basic salary. Level 1 employees of Pay Matrix whose basic salary is at Rs 18,000 would be getting Rs 3060 on the basis of 17% of DA. If a DA of 32% will be reinstated he/she will see their DA going up to Rs 5760. Someone at level 40 of the pay matrix with a basic of Rs 56,900 who was receiving a DA of Rs 9673 will be getting a hike of up to Rs 18,204. According to the different pay grade, there will be an increase accordingly.

Calculation of DA

DA / DR is fixed as per the rate of inflation. The 7th Pay Commission has considered 2016 as the base yea with the index of the base year at 261.4. The Labor Bureau releases the Consumer Price Index (CPI) and the 12-month consumer price index is averaged and subtracted from the base year index to arrive at DA.

DA = 12 Month Consumer Price Index Average -261.4 / 261.4 x 100

Delay a price to pay for pensioners

The delay in getting the allowance and relief is a double blow for pensioners retiring after January 2020 as their pensions were calculated on less basic and DA. Gratuity and leave encashment are calculated on existing dearness allowance. In the last one and a half years, if the increased DA had been received, then the pension base could have been 21%, 24% or 28%. But he/she got pension only on the basis of 17%.

Arrears if any?

“The government owes about Rs 38,000 crore as arrears. Right now the government is only preparing for the restoration of DA/DR, as the government is already battling with the slowdown of the economy. Many schemes have been announced and the money is coming out of the government’s pocket in the announcement like free food to loans for the industries facing pressure, in such a situation, will the government make another expenditure?” asks Shiv Gopal Mishra, secretary of NC (staff side) JCM.