Introduction

The official notification said: "Cabinet has approved the release of an additional installment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners, due from 1st January 2023. This will benefit 47.58 lakh employees and 69.76 lakh pensioners."

As of now, all central government employees and pensioners are receiving 38% DA and DR under the 7th Pay Commission. However, now that the 4% DA hike has been announced, this percentage will rise to 42%. 

According to sources, dearness allowance will be given at a rate of 42% in March salary, with arrears of two months — January and February 2023 — also being paid. 

Employees in the central government can compute their salary increase based on their basic pay and grade following the DA rise.

DA Hike: Dearness Allowance Formula 

The formula used to calculate the dearness allowance hike of central government employees:

For them, the Dearness Allowance Hike Formula is - [(Average of All India Consumer Price Index AICPI) for the last 12 months - 115.76)/115.76]×100. 

The formula for calculating the DA hike of PSU personnel

Now, if we talk about the Dearness Allowance of people working in PSUs (Public Sector Units), then the method used to calculate is -

Dearness Allowance Percentage = [Average of Consumer Price Index for the last 3 months (Base Year 2001 = 100)-126.33)] x100

According to the 7th Pay Commission matrix, there will be a massive increase in the salary of the officer grade.  

DA Hike: How much will the pension increase?

If the basic pension of a pensioner is Rs 31,550. 

Then, Basic Pay - Rs 31,550 

Dearness Allowance (DA) paid so far - 38% - Rs 11,989/month 

 New Dearness Allowance (DA) every month - 42% - Rs 13,251/month

 As the Dearness Allowance (DA) increases by 4%, there will be an increase of Rs 1262/month in salary.

DA Hike: Dearness Allowance arrears will likely be disbursed along with the increase in DA 

Along with the announcement of the Dearness Allowance / Dearness Relief (DR) hike, two months' arrears will also be paid.

This will likely include payment of increased DA for January 2023 and February 2023.

That is, an additional payment of Rs 1262 + Rs 1262 will be made along with the salary/pension for March 2023.

Dearness Allowance Hike: Calculation at 42% DA

After the 4% Dearness Allowance hike announced today, the total DA figure has risen to 42%. 

If calculated in the maximum salary range, then the total annual dearness allowance on the basic salary of Rs 56,900 will be Rs 2,86,776.

Those falling in this pay grade will get Rs 2,276 more as DA, than the current rate. Their monthly DA amount will rise to Rs 23,898 with this DA hike announcement.

Conclusion

This is good news for the people working in the government sector. Dearness Allowance of people shall be increased. A hike in the DA shall create financial stability for the people who are eligible for DA.