7th Pay Commission: Good news for central government employees, Cabinet approves 3% hike on...

In another major decision to give some monetary respite before the festive season, the Union Cabinet has given its nod for increasing the Dearness Allowance (DA) for central government employees and pensioners by 3 percent. This increase will take the DA from 42% to 45% of the basic pay, with effect from 1st July 2024. The decision was made during a cabinet meeting on Wednesday ahead of the Diwali festival, which will benefit over 10 million central government employees and pensioners at this time of the year.

The adjustment works out to Rs 540 more per month for the entry-level employee who earns about Rs 18,000 per month and arrears for July, August, and September. This increase is important as it enables employees to deal with rising inflation by pegging salary reviews to the Consumer Price Index (CPI). The DA is an significant part of the remuneration system that must address the growing cost of living.

Traditionally, the central government adjusts the DA twice annually, with the changes normally taking effect in March and September. January DA hike is normally declared during Holi time and July increase during Diwali festival. This year’s DA hike was preceded by a 4% increase in March this year, which saw the DA raised to 50% for state employees.

In a similar development, Chhattisgarh Chief Minister Vishnu Deo Sai has also declared a 4 percent raise in DA for state government employees that has been taken up to 50 percent of the basic salary from October 1 this year. This decision is for about 3,90,000 state employees and will help them financially during the festive season.

These increases have been announced at the right time to show the government’s understanding of its workforce needs, especially with costs of living and other economic challenges tightening. These changes are expected to bring much relief to employees and pensioners ahead of Diwali and hence help improve their purchasing power during the festive season.