Centre unlikely to Hike Dearness Allowance 4%

Last Updated on August 9, 2023 by Brajesh

Centre unlikely to Hike Dearness Allowance by 4%, which everyone was expecting till date

The dear allowance (DA) is a crucial component of the salary and pension structure for Central Government Employees. It is designed to counterbalance the impact of inflation on their purchasing power. As per the latest news, the Central Government is expected to announce a 3% hike in the DA. However, this raise falls short of the employees’ expectations, who were hopeful for a 4% increase. In this article, we will delve into the details of the DA hike, the factors influencing it, and its implications for the employees and pensioners.

Centre unlikely to Hike Dearness Allowance by 4%

Currently, Central Government Employees receive 42% of their basic pay as DA, while pensioners are entitled to 42% of their basic pension as Dearness Relief (DR). However, this percentage is set to change with the upcoming hike. The expectation was that a 4% increase would take the total DA/DR to 46%, providing employees and pensioners with additional funds to combat the erosion of their monthly pay due to rising inflation.

The Latest All India CPI-IW Data and its Implications

The dearness allowance is calculated based on the All-India Consumer Price Index for Industrial Workers (CPI-IW) data released by the Labour Bureau every month. The AICPI-IW data for June 2023 indicated a little over 3% increase in the DA. However, the government traditionally avoids increasing the DA beyond the decimal point. Therefore, it is highly likely that the government will opt for a 3% hike in the DA and DR.

The Proposal and Approval Process

The Department of Expenditure, under the Finance Ministry, is responsible for formulating the proposal to increase the DA. This proposal will consider the revenue implications of the hike. Later, it will be presented to the Union Cabinet led by Prime Minister Narendra Modi for final approval. Once approved, the DA hike will benefit over 1 crore Central Government Employees and pensioners.

The Impact on Central Government Employees

The DA hike holds significant importance for Central Government Employees, as it directly affects their monthly income. With the rising cost of living and inflation, the increase in DA provides some relief to employees, helping them maintain their standard of living. It also serves as an incentive to motivate employees to perform their duties more effectively.

The Benefits for Pensioners

Pensioners, who have dedicated their lives to serving the nation, rely on their pension as their main source of income. The DA hike is a crucial factor in ensuring that pensioners can meet their financial obligations and sustain a comfortable lifestyle. It helps pensioners cope with the rising prices of essential commodities and medical expenses, providing them with a sense of security and stability.

The Role of the 7th Pay Commission

The recommendations of the 7th Pay Commission form the foundation of the salary and pension structure for Central Government Employees. The commission carefully considers various factors such as inflation, economic growth, and financial sustainability while formulating its recommendations. The DA/DR hike is a testament to the commission’s efforts to ensure the well-being of employees and pensioners.

The Importance of Addressing Inflation

Inflation poses a significant challenge to the financial stability of individuals, especially those on fixed incomes like employees and pensioners. The DA hike plays a crucial role in countering the impact of inflation, enabling employees and pensioners to maintain their purchasing power. By adjusting the DA periodically, the government acknowledges the need to address the rising cost of living. With the announcement of the 3% DA hike on the horizon, Central Government Employees and pensioners eagerly await the final decision. While the increase may not meet their initial expectations, any rise in the DA is a positive step towards alleviating their financial burdens. It is essential for the government to continue monitoring the impact of inflation and take proactive measures to ensure the well-being of its employees and pensioners.


The dear allowance hike is a matter of concern and anticipation for Central Government Employees and pensioners. While the expected 4% increase did not materialize, a 3% hike in the DA is still a positive development. It reflects the government’s commitment to addressing the impact of inflation and providing financial stability to its employees and pensioners.

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