Additional 2% dearness allowance: An icing on the cake for government employees

It’s time for party for the government employees as the government is in their favor. The government is keeping an eagle’s eye on the Dearness Allowances (DA) of about 2% for around 50 Lakh employees and more than 50 Lakh pensioners. The person behind this Dearness Allowance hike decision is our Prime Minister Narendra Modi who leads the Union Government.

The major concern for bringing up the Dearness Relief and Dearness Allowances is to help counterbalance the constant price rise scenario on the earnings of the government employees. The average consumer price index for industrial workers (CPI-IW) is set at about 4.95% since January 1 to December 31, 2017 for increasing the DA of the employees. The government had increased the DA by 2% last October from July 1, 2016 and yet again government plans to further hike DA by 2%.

For carrying out the calculations related to the hiked DA, the Central Government studies the overall 12-month retail price rise. Even though the price rise is on the same side of the coin of allowance, it ignores the rise beyond the decimal point for making the calculation of the Dearness Allowances easy. For example if the hike allowance turns out to be 2.95% then the Central government will consider only 2% as the DA. Thus, the governments agreed upon a formula that can help the government employees get a bonanza.

Previously, the government had hiked up the allowances from 6% to 125% of the basic pay. But after lot of meetings and discussions, the DA was merged into the basic pay after the implementation of the 7th Pay Commission award.

For now, the Central government has decided on a hike of 2% on the Dearness Allowance for the government employees as well as pensioners in addition to the July 1, 2016 allowance rise.

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