The Central Government revises the Dearness Allowance (DA) and Dearness Relief (DR) rates for employees and pensioners twice a year, in January and July, based on the All India Consumer Price Index (AICPI) data. As of January 2024, a 4% DA increase was implemented, raising it from 46% to 50%, effective until June. Now, the next DA revision is expected to occur from July 2024 onwards.
With the January to July 2024 AICPI data still pending
Uncertainty looms regarding whether the current DA, at 50%, will remain stagnant or increase further. There are several factors influencing this decision, including the release of AICPI data, which was due on March 28 but has yet to be published. Additionally, the CPI-IWU for February has not been released, creating speculation about potential adjustments in the calculation methodology by the Labour Bureau or the simultaneous release of data due to electoral code of conduct regulations.
As the decision for the next DA hike is expected in July
The outcome will depend on various factors. If the AICPI data indicates a rise, the DA could potentially increase from 50% to 54%. However, if the current DA is to be reduced to zero, adjustments would need to be made to the salary structure or a new pay scale introduced. At present, the government has not indicated any intention to revisit the recommendations of the 7th Pay Commission.
The recommendations of the 7th Pay Commission
Implemented in January 2016, led to changes in the fitment factor and salary and DA calculation formulas. The anticipation now revolves around what adjustments will be made to salary and DA formulas, how much the DA will increase in July 2024, or whether it will be reduced to zero. Answers to these questions will only be clear after July, as stakeholders eagerly await the decision on whether the DA will remain static at 50% or increase to 54%.