7th Pay Commission: Dearness allowance raised to 9% even as pay hike for central government employees hangs fire

Aug 30, 2018, 04:56 PM IST

7th Pay Commission: Central government employees and pensioners have been demanding a salary hike because of the inexorable price rise. It has left the Centre unmoved, but the issue is still very hot. That inflation is eating into central staff's salaries has been recognised by the PM Narendra Modi led government officially now and 7th Pay Commission report recommendations are at the heart of it. Here is how central government employees have been impacted by this on dearness allowance (DA) and dearness relief (DR):  


7th Pay Commission: First, check out the demands of the central government employees. Notably, they want the current fitment factor to be junked and replaced with a new one. Thus, from 2.57 times fitment factor, they want it to jump to 3.68 times. Reason: Staff says their salaries are being eaten away by price rise. Also, this is not a new demand. It is quite old and has been pending for years and therefore, it is high time Centre takes a decision on it. Image source: PTI


7th Pay Commission: Dearness allowance (DA) has been hiked by PM Modi led Cabinet for central government employees by 2 percent to 9 percent yesterday and this will be a very big source of joy for them as it will translate into more money in their hands. Even pensioners have benefitted as Dearness Relief (DR) for them has been hiked by the same amount. Image source: PTI 


7th Pay Commission: Why was it hiked? Because of the very reason central government employees want their pay raised through a higher fitment factor! Dearness allowance and Dearness relief were hiked to compensate for price rise or inflation that was eating into the salaries and pensions. The DA and DR hike is in accordance with the formula based on 7th Pay Commission report recommendations. Notably, the Dearness Allowance (DA) is paid to Central Government employees to adjust the cost of living and to protect their Basic Pay from erosion in the real value on account of inflation. Image source: PTI 


7th Pay Commission: This hike in dearness allowance and dearness relief comes quickly in the wake of the massive disappointment for central government employees and pensioners when no hike in salary and pensions was announced by the government on Independence Day even though many reports had suggested that this may happen. Image source: PTI 



7th Pay Commission: Further good news is that Dearness Allowance and Dearness Relief hike will be applicable with retrospective effect. It will be effected from July 1, 2018. This DA and DR hike represents a hike of 2% over the existing rate of 7% of the Basic Pay and Pension of central government employees and pensioners. Image source: PTI 




7th Pay Commission: Dearness Allowance and Dearness Relief would cost the Centre as much as Rs 6,112.20 crore per year and Rs 4,074.80 crore in the financial year 2018-19, which is 8 month period between July, 2018 and February, 2019). Image source: PTI 


7th Pay Commission: DA and DR hike will increase the money in hand of about 48.41 lakh Central government employees and 62.03 lakh pensioners. However, the basic issue raised by central government employees remains as it was. Their salaries have not been raised as per a fitment factor of 3.68 times. This is their biggest demand. It will lead to the lowest level salaries rising from current Rs 18000 to Rs 26,000. It will also ensure that inflation does not hit their salaries too hard. Image source: PTI