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There is good news expected for Central government employees as Dearness Allowance (DA) hike is expected for them. The Central government employees are expecting the Dearness Allowance (DA) for the January-June 2020 period from July 2021 onwards. 

According to the AICPI (All India Consumer Price Index) of the  Labour Ministry, inflation went up 2 per cent in during the January-June 2020 period.

According to Zee Business, the experts suggest that because of the inflation central government employees may very soon get a 3 per cent hike in their DA. However, there is no official announcement has not been made yet.

Harishankar Tiwari, Former Chairman at Pragyagraj-based AG Office Brotherhood commented on the Labour Ministry Data and the expected DA hike. “DA hike is announced on the basis of AICPI hike. Since the AICPI number rose from 330 to 332 during January 2020 to June 2020. We can expect the DA hike to the tune of 3 per cent,” Tiwari told Zee Business.

At present, Central government employees are getting 17 per cent DA. Howver, due to COVID-19 crisis, the centre had decided to freeze the DA till June 2021 to generate funds for fighting COVID-19. The centre is expected to generate Rs 37,000 crore by this method.

However, this does not mean that DA for this period has been cancelled. The DA thus compounded will be added to the monthly salaries of the employees from July 2021 onwards.

Speaking on freezing of DA and DR, Harishankar Tiwari said that earlier too the DA and DR have been frozen during challenging times, but later on these were restored with an increased hike in DA.

What is Dearness Allowance (DA)

Dearness Allowance (DA) is basically a component of salary paid to government employees. DA is a cost of living adjustment allowance paid to government employees and pensioners linked to the Consumer Price Index to offset the impact of inflation. DA is fully taxable.

DA and AICPI

DA is linked to the All India Consumer Price Index (AICPI). For DA calculation, AICPI average is taken in the formula.

How is DA calculated:

Percentage of DA = {(Average of All-India Consumer Price Index for the past 12 months (Base year 2001=100) -115.76)/115.76}x 100.