New Delhi: The government is to approve hiking dearness allowance (DA) to 2 per cent under 7th Pay Commission recommendations, which was accepted by the cabinet with retrospective effect from January 1, 2016.
Finance Minister Arun Jaitley
The 7th Pay Commission recommended the merging of 125 percent dearness allowance into the basic pay.
The central government employees also now get 125 per cent dearness allowance from January, 2016 in pre-revised scales.
The 7th Pay commission recommended new pay matrix, based on the Consumer Price Index 261.42, its effective date in January this year, while the 6th Pay commission had recommended the basic pay based on the Consumer Price Index 115.76 in January 2006.
As per practice, the government uses Consumer Price Index- Industrial Workers ( CPI-IW) data of the past 12 months to arrive at a quantum for the purpose of any DA hike.
Thus, the CPI-IW from July 1, 2015 to June 30, 2016 would be used to take a final call on the matter.
The CPI (IW) of the months July, August, September, October, November, December, January, February, March, April, May and June were 263, 264, 266, 269, 270, 269, 269, 267, 268, 271, 275 and 277 respectively.
The average of the consumer price index -industrial workers (CPI-IW) from July 1, 2015 to June 30, 2016 works out to be 2.90 per cent. Thus the Central government will hike dearness allowance for it employees by 2 per cent as government will not round off the figures for the purpose of calculating dearness allowance.
The proposed hike is in accordance with the accepted formula based on the recommendations of the 6th Pay Commission as 7th Pay Commission recommended to go for ditto in this regard.
Accordingly, new Dearness Allowance Calculation formula is given below:-
(12 Monthly Average) – 261.42
———————————X 100 = D A Percentage (ignore decimals)