Economy

Government Employees’ Dearness Allowance is likely to increase in July

Therefore, if the fitment factor is increased, Central Government employees may also receive an increase in their basic salary in July along with an improved DA.

The dearness allowance (DA), which will be released the next month, in July 2022, may be increased for thousands of government employees. Twice a year, in January and July, the DA is announced.

Rumor has it that the government may adjust the DA amount for July 2022 as a result of a rise in retail inflation.

Every year, in March and September, the DA announcement is customarily made. However, no increase or alteration in the DA amount was made as a result of the Coronavirus pandemic for 1.5 years after December 31, 2019.

Due to the Pandemic, the Finance Ministry halted the DA hike from January 2020 until June 30, 2021. In July of last year, the DA hike was reinstated.

All Central Government employees’ DA was subsequently increased in July 2021 from 17 to 28 percent in accordance with the recommendations of the 7th Pay Commission.\

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Later in October 2021, the DA was increased by more than three times again, and the new rate took effect on July 1 of that same year.

Due to these two increases, all government employees began receiving DA at a rate of 31% as of July 1, 2021.

After that, a three-time increase in DA was announced on January 1, 2022, and as a result, government employees began receiving DA at a rate of 34%.

Any increase in DA that the Central Government now decides to implement would take effect on July 1st, 2022. Arrears owed to all Central Government employees and pensioners between July 2022 and the time the increase in DA takes effect would also be paid to them.

If this increase is made three times, there will be an increase in DA of 540 on the basis of the 7th Salary Commission’s recommendations and a basic pay increase of 18,000 rupees. Basic salary of 25,000 will result in a DA hike of 750 per month, while basic pay of 50,000 will result in a DA hike of 1,500 per month.

There are rumours that the government may soon authorise a hike in the fitment factor, thus government personnel this time around may also receive a raise in their basic salary with the inclusion of the fitment factor in addition to the increase in DA.

The fitting factor should be raised from 2.57 times to 3.68 times, as has long been demanded by employee unions.

The minimum wage or basic pay for Central Government employees will also increase from 18,000 to 26,000 if their demand is granted.

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Prior to this, in 2017, the government raised the starting pay. The base pay was increased at that time from 7,000 to 18,000 rupees.

Therefore, Central Government personnel may also receive a raise in their basic pay as well as an enhanced DA in July if the fitment factor is increased.

What does fitting factor mean?

The 7th Central Pay Commission (CPC) multiplies the basic pay under the 6th Central Pay Commission regime (Pay in Pay band + Grade pay) with the fitment factor to determine the basic pay under the revised pay structure (7th CPC).

The 7th Central Pay Commission calculated a fitment factor of 2.57.

Quantity of growth anticipated following increase in fitting factor

The wage of the employees may increase dramatically if the fitting factor is raised.

To demonstrate this, let’s use an example. The employees’ minimum pay would be $26,000 if the government increased the fitment factor to 3.68 times in response to demand.

The basic pay of 18,000 will increase to 46,260 after all allowances have been added, based on the fitment factor of 2.57 (18,000 * 2.57). The salary will increase to 95,680 (26,000 * 3.68 = 95,680) if the fitting factor is 3.68.

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