The Central Government has recently announced a 3% increase in Dearness Allowance (DA) for government employees and pensioners. This increase will be effective from July 1, 2024 and will benefit approximately 1.14 crore employees and pensioners. With this decision, the DA rate has increased from 50% to 53%. This step has been taken to provide relief to the employees amid rising inflation.
Also, an important update has also come regarding 18 months DA Arrears. The government has indicated that it plans to release these outstanding amounts by the end of December 2024. This step will be a major relief to the employees affected due to the suspension of DA payments during the COVID-19 pandemic.
What are DA and DA Arrears?
Dearness Allowance (DA) is an additional allowance given to government employees and pensioners to reduce the impact of inflation. It is a percentage of the basic salary and is revised every six months.
DA Arrears is the outstanding amount that employees get when the DA increase is made with retrospective effect. In the present case, 18 months of DA Arrears means the outstanding amount of DA payments stopped during COVID-19.
Overview of DA and DA Arrears
| Description | Information |
| Current DA Rate | 53% |
| Increase in DA | 3% |
| effective date | 1 July 2024 |
| number of beneficiaries | approximately 1.14 crores |
| Duration of DA Arrears | 18 months |
| Expected date of release of DA Arrears | By the end of December 2024 |
| government spending | Approximately Rs 9,448.35 crore per year |
Impact of 3% increase in DA
The 3% increase in DA will significantly increase the take-home salary of employees. For example:
- If the basic salary of an employee is Rs 30,000, he will now get Rs 15,900 DA (at the rate of 53%), whereas earlier he was getting Rs 15,000 (at the rate of 50%).
- Thus, there will be an increase of Rs 900 per month.
This increase will help employees cope with rising inflation and increase their purchasing power.
Status of 18 months DA Arrears
Amid the COVID-19 pandemic, the government had stopped the increase in DA from January 2020 to June 2021. Now the government is planning to release the DA Arrears of this period. The move will benefit approximately more than 1 crore employees and pensioners.
Important points about DA Arrears:
- Duration: 18 months (January 2020 to June 2021)
- Expected Payment Date: End of December 2024
- Beneficiaries: Central Government Employees and Pensioners
How are DA Arrears calculated?
DA Arrears are calculated on the basis of basic pay and the rate of DA during that period. For example:
- If the basic salary of an employee was Rs 30,000 and DA increased from 17% to 28%, the difference of 11% will be payable for 18 months.
- Calculation: 30,000 x 11% x 18 = Rs 59,400
Thus, this employee will get DA Arrears of approximately Rs 59,400.
Importance of DA and DA Arrears
- Inflation protection: DA protects employees from rising prices.
- Improvement in standard of living: Regular DA increase improves the standard of living of employees.
- Economic Stimulus: Payment of DA Arrears promotes spending in the economy.
- Boosting morale: This step boosts the morale of government employees.
Impact on DA and pension
The increase in DA not only impacts current employees, but pensioners also benefit. Pensioners get the same percentage increase in the form of Dearness Relief (DR). This also increases their monthly income.
DA increase in other states
Apart from the central government, several state governments have also announced increase in DA for their employees:
- Chhattisgarh: Increase of 4%, total DA increased to 50%
- Rajasthan: Increase of 4%, total DA increased to 46%
- Himachal Pradesh: 4% increase
This shows that governments across the country are making efforts to provide relief to their employees from inflation.
How is DA calculated?
DA is calculated on the basis of All India Consumer Price Index (AICPI). The current formula is as follows:
- For Central Government Employees:
DA% = [(पिछले 12 महीनों का AICPI औसत – 115.76) / 115.76] x 100 - For Public Sector Employees:
DA% = [(पिछले 3 महीनों का AICPI औसत – 126.33) / 126.33] x 100
DA and taxes
DA is subject to income tax and must be declared as part of the salary. It is also involved in calculating retirement benefits such as provident funds and pension.
future prospects
Although the 8th Pay Commission has not been announced yet, the government may develop a new mechanism to revise the salaries and pensions of employees. This could be based on performance and inflation.
conclusion
The 3% increase in DA and possible release of 18 months of DA Arrears is a big relief for government employees and pensioners. This move will not only strengthen their financial position but will also provide a boost to the overall economy. However, it is important to note that the actual release of DA Arrears will depend on the final approval of the government.
Disclaimer: This information is based on government announcements and media reports. The actual release and timing of DA Arrears will depend on the final decision of the Government. Employees and pensioners are advised to wait for official notifications and not rely on any rumor or unauthorized information.
