Central Government Employees DA calculation: The Union government has decided to increase the Dearness Allowance of central government employees by 5 per cent over the existing rate of 12 per cent of their Basic pay. The hiked DA of 17 per cent would be provided with effect from July 1, 2019. In a statement, the Finance Ministry said on Wednesday that the increase was “in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.”
The government pays DA to central government employees to help them adjust the cost of living and protect their Basic pay from erosion in the face of inflation.
What 7th Pay Commission said on DA formula
The 7th Pay Commission had recommended not to change the formula for DA calculation.
The DA is calculated on the basis of All India Consumer Price Index (Industrial Workers).
The 7th Pay Commission noted, “The VI CPC had recommended that the National Statistical Commission may be asked to explore the possibility of a specific survey covering government employees exclusively, so as to construct a consumption basked representative of government employees and formulate a separate index. This has, however, not been done.”
The panel further recommended not to change the formula. It said, “Keeping in mind that the present formulation of DA has worked well over the years, and there are no demands for its alteration, the Commission recommends continuance of the existing formula and methodology for calculating the Dearness Allowance.”
Dearness Allowance Calculation Formula
Formula for central government employees:
DA% = {(Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76)*100}
AICPI stands for All India Consumer Price Index
Formula for Central public sector employees:
DA% = {(Average of AICPI (Base Year 2001=100) for the past 3 months -126.33)/126.33)*100}
The DA hike announced by the government ahead of Diwali festival would benefit about 49.93 lakh Central Government employees.