7th Pay Commission: Government employees likely to get 4% DA hike in March 2024

7th Pay Commission: The government is likely to announce a four per cent hike in dearness allowance (DA) for central government employees next month, i.e. in March 2024, according to various media reports. The dearness allowance for employees and pensioners is worked out on the basis of the latest Consumer Price Index for Industrial Workers (CPI-IW) brought out by the Labour Bureau every month. 

The increase in DA will be in accordance with the accepted formula, based on the recommendations of the 7th Central Pay Commission. In October 2023, the Cabinet had last increased the DA for government employees and Dearness Relief (DR) for pensioners by four per cent. With that four per cent hike, the DA was increased from 42 per cent to 46 per cent. 

The decision benefitted 48.67 lakh central government employees and 67.95 lakh pensioners. Earlier, Diwali bonuses for Group C and non-gazetted Group B level officials, including paramilitary forces, was approved by the government. For 2022–2023, the finance ministry had set a limit of ₹7,000 for the calculation of non–productivity linked bonuses (ad hoc bonuses) for central government employees.

Also Read: 7th Pay Commission: Cabinet approves 4% hike in DA for central government employees

The government decides on DA increases based on the country's inflation rate. If inflation is high, the DA will most likely be raised further. The DA and DR increases are determined by the percentage increase in the 12-month average of the All India Consumer Price Index (AICPI) for the fiscal year.

Meanwhile, West Bengal Chief Minister Mamata Banerjee had announced in December 2023, that her government would be giving a four per cent raise in DA to all its employees from New Year's Day.

"I announce that all 14 lakh state government employees, teaching and non-teaching staff of all schools, colleges and universities, and employees of all statutory undertakings and parastatals and pensioners would be getting another instalment of 4 per cent DA from January 1, 2024," said Banerjee.

Stating that the provision of DA is mandatory for the central government whereas it is "optional" for the state, Banerjee said that for the DA hike, her government would have to bear an additional expense of ₹2,400 crore.

Although the central government revises the allowances on January 1st and July 1st of each year, the decision is usually announced in March and September. After the upcoming DA hike, both employees and pensioners will be benefitted.