In the coming year of 2023, central government employees are likely to receive good news regarding their pay. According to media reports, the government is anticipated to make decisions on three issues: the increase in DA and DR, the adjustment of the fitment factor, and the payment of 18-month DA arrears. Government employees will receive bonuses for each of these three decisions.
Every January 1 and July 1, dearness allowance (DA) and dearness relief (DR) are updated. The most recent increase increased the DA by 4% to 38%, benefiting around 48 lakh central government employees and 68 lakh retirees. Prior to this, the government increased the DA under the 7th Pay Commission by 3% to 34% in March.
DA Increase in 2023
According to news reports, the DA and DR will increase by 3-5% in March 2023, starting in January 2023. With this increase, the DA will rise by up to 43%.
Apart from that, it’s possible that the problem of the 18-month DA arrears payment from January 2020 to June 2021 will be resolved shortly. An 18-month DA arrear may be paid to the employees. The pay band and structure of the employee determines the amount of DA arrears.
Fitment Factor To Be Revised
Employee unions have been calling for the fitment factor in their pay to be revised. The fitment factor is a standard number that is multiplied by the base pay to determine the employees’ total salaries.
All categories of central government employees currently get a benefit known as the common fitment benefit, which is 2.57. Now, if someone receives a basic salary of 15,500 rupees with a 4200 grade pay, his total income will be 15,5002.57, or 39,835.
The fitment ratio of 1.86 has been suggested by the 6th CPC. According to a media report, employees are now requesting that the government boost it to 3.68. The increase will bring the minimum salary up to $26,000 from its current level of Rs 18,000.
How Is DA Hike Decided?
The government decides on the hike in DA based on the inflation rates in the country. If the inflation is high, the chances are that the DA will be hiked more. In the current scenario, in India, the retail inflation is above the RBI’s comfort zone of 2-6 per cent for the past 10 months. This may prompt the government to allow more hikes in salaries.
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.
The Union Cabinet authorised a 3% rise in DA under the 7th Pay Commission in March, bringing it to 34% of the basic income. The formula used by the central government to determine the DA and DR for central government employees and pensioners was changed in 2006.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.