Before 2023, central government employees will be able to enjoy significant increases to their pay. The federal government has announced that the first of January will mark the introduction of the new Dearness Allowance. Recent reports confirm that the increase in DA is expected to take place in January 2023, although there are many reasons that employees may have mixed emotions about what courts will ultimately decide upon as the new rate of DA.
There have been numerous reports on the federal government’s intentions to provide employees with an increase in both the Dearness Allowance and the Dearness Relief beginning in January of this upcoming year. However, unlike in previous years, employees may find that the percentage of their present salaries that they receive for the DA in 2018 may not be as high as they hope. Currently, the DA in India is 58%.
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By what percentage might the DA increase?
According to reports, the government is expected to increase the Dearness Allowance (DA) from 58% to 60% this time with an expected increase of only 2% in the DA. The Dearness Allowance (DA) of the employees of the Central Government is generally revised twice a year in January and July. The expected increase of 2% would be the lowest in the last several years, with all previous increases ranging between 3 and 4 percent.
On December 31, 2025, the Seventh Pay Commission will run out and new pay scales as part of the Eighth Pay Commission will be created. Many expect that the announcement of Eighth Pay Commission rates will take a while (until late 2027/early 2028) to take effect.
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So what does this mean for employees’ salaries?
If the DA increase of 2 percent is approved, 10 million central government employees/pensioners will directly benefit from a 2 percent increase on their basic salary. So for example, if an employee’s salary is 18000 rupees per month, the 2 percent DA increase will give them an extra 360 rupees each month. While a 2 percent increase may provide some relief to the government sector, there is likely to be disappointment and frustration that no positive news before the announcement of the Eighth Pay Commission is available. This disappointment will likely hamper morale, even more so when the government traditionally announces senior member salaries sometime around Holi (the Holi Festival), effective January onward, with arrears being paid for the period up to that time.