7th Pay Commission: Central Government Announces 4% DA Hike for Employees and Pensioners

In a long-awaited decision, the central government has approved a 4% hike in dearness allowance (DA) for its employees, effective from July 1, 2023, bringing the DA rate to 46%. Here's everything you need to know about this development.

Understanding Dearness Allowance and Dearness Relief:

Dearness allowance (DA) is an additional amount provided to employees as part of their salary to offset the impact of rising prices in the economy. When inflation increases, the value of currency diminishes, reducing the effective income of employees and their purchasing power.

Dearness relief (DR) is a similar allowance provided to pensioners. When DR increases, it leads to an increment in the monthly pension received by pensioners.

DA is calculated as a percentage of the basic pay, while DR is calculated as a percentage of the pension amount. Although the central government typically revises these allowances on January 1 and July 1 each year, the official announcement is generally made around March and September.