According to recent media reports, the Modi government in India is expected to announce a hike in dearness allowance (DA) and fitment factor this month. The proposed increase in the minimum salary of government employees would rise from Rs 18,000 to Rs 26,000 after the hike in fitment factor. The government is expected to revise the fitment factor and dearness allowance (DA) by March 20.
A finance ministry official, speaking on the condition of anonymity, told India.com that central government employees can expect a 4% hike in Dearness Allowance this time. Additionally, Dearness Relief could also see a 4% hike for retired employees. The official added that if the Dearness Allowance is hiked, it will be effective from January 1, 2023.
For central government employees, the DA is calculated based on the average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months, subtracted by 115.76, divided by 115.76, and then multiplied by 100. For central public sector employees, the DA is calculated in a similar manner, but the average is taken for the last three months, and the base number used is 126.33.
It is important to note that if the DA is hiked to 42% from 38%, then employees’ dearness allowance on their salary will also increase. The amount of DA an employee receives is different depending on their level of the pay matrix. For example, if an employee’s basic salary is at level 1 of the 1800 grade pay scale and is Rs 15,000 per month, with DA at 42%, the dearness allowance would be Rs 6300 (42% of Rs 15,000 per month). At 38%, the dearness allowance would be around Rs 5700 (38% of Rs 15,000 per month).
In summary, the Modi government is expected to announce a hike in dearness allowance and fitment factor for government employees in India. The proposed increase in the minimum salary of government employees would rise from Rs 18,000 to Rs 26,000 after the hike in fitment factor. The DA is calculated based on the average of the All-India Consumer Price Index and the base number used is different for central government and central public sector employees. The amount of DA an employee receives is different depending on their level of the pay matrix.