Central government employees could soon rejoice as reports indicate a substantial increase in their salaries, including dearness allowance (DA), house rent allowance (HRA), and gratuity. According to insights from the Economic Times, based on data from the Consumer Price Index for Industrial Workers (CPI-IW) published by the Labour Bureau, a 50% rise in DA is anticipated.
DA forms a significant portion of central government employees’ salaries, intended to mitigate the impact of inflation. As DA approaches 50%, various other allowances and salary components are poised to surge, promising a notable uptick in overall remuneration. The 7th Central Pay Commission has delineated specific provisions on how a 50% DA will impact employees’ salaries.
Key allowances set to escalate when DA reaches 50% include house rent allowance, children’s education allowance, special allowance for child care, hostel subsidy, transportation allowance on transfer, gratuity ceiling, dress allowance, mileage allowance for personal transport, and daily allowance.
For instance, the HRA increase can be illustrated by the example provided by Sanjeev Kumar, Partner at Luthra and Luthra Law Offices. Currently, based on a base pay of Rs 53,500, HRA amounts to Rs 14,445, Rs 9,630, and Rs 4,815 for type X, Y, and Z cities, respectively. However, with a 50% DA, HRA will rise by 25%, resulting in revised percentages of 30%, 20%, and 10%, respectively, and corresponding amounts of Rs 16,050, Rs 10,700, and Rs 5,350.
Further, as per the 7th Pay Commission’s recommendations, children’s education allowance will surge by 25% with each 50% DA increment. For instance, an allowance of Rs 2,250 per month will escalate to Rs 2,812.5 per month.
Additionally, benefits such as special allowance for child care, gratuity ceiling, dress allowance, and daily allowance will also witness a 25% boost with each DA increment, ensuring employees can cope with the escalating cost of living.
The impending salary hike signals a favorable development for central government employees, offering them greater financial stability amidst economic fluctuations.