Wednesday 8 February 2023
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EconomyDearness allowance hike: Are union govt employees getting 18 months' arrears?

Dearness allowance hike: Are union govt employees getting 18 months’ arrears?

If implemented, a union government employee with a basic salary of Rs 18,000 will receive an annual dearness allowance of Rs 73,440 other than a promotion

Implementing one of the 7th Pay Commission recommendations, the union government may bestow upon its employees 18 months worth of dearness allowance (DA) arrears. The union cabinet may take a favourable decision next week, sources said. If the government goes ahead with the proposal, some employees may receive up to Rs 2 lakh in their bank accounts.

The union government had restored the dearness allowance and dearness relief for employees and pensioners from 17% to 31% from October 2021. However, the government has not paid the arrears for the time the dearness allowance hike was put on hold due to the Covid-19 pandemic. 

If the dearness allowance increases then the of union government employees will increase automatically. However, it is still unclear how much dearness allowance hike will be implemented. But, according to the of the AICPI index, it is expected that the DA would increase by 3% in 2022.

Besides the dearness allowance hike, some union government employees are also expected to get promotions in 2022. Some reports claim that talks are going on about the fitment factor before Budget 2022 and the union government may take a final decision in this regard soon. An increase in the fitment factor means that the minimum basic of union government employees will increase in 2022.

An increase of 3% in the dearness allowance means that the total DA of union government employees will be 34%. It means a union government employee with a basic of Rs 18,000 will receive an annual DA of Rs 73,440.

Calculation of dearness allowance on minimum basic

  • Basic salary of employee: Rs 18,000
  • New DA (34%): Rs 6,120/month
  • DA so far (31%): Rs 5,580/month
  • How much dearness allowance increased: Rs 540/month
  • Increase in annual Rs 540 x 12 = Rs 6,480
  • Calculation on maximum basic
  • Basic of the employee: Rs 56,900
  • New DA (34%): Rs 19,346/month
  • DA so far (31%): Rs 17,639/month
  • How much dearness allowance increased 19,346-17,639: Rs 1,707/month
  • Increase in annual Rs 1,707 X12 = Rs 20,484

The union government has not officially said anything in relation to the payment of DA arrears, meaning that the reports could be mere speculation. 

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