The Union government has recently clarified that it has no plan to raise monthly gross basic pay of the central government employees after the recent hike in the Dearness Allowance (DA). Answering to “Whether the Government is actively considering to raise monthly gross basic pay of Government employees after the restoration of full benefits of Dearness Allowance and Dearness Relief in accordance with fitment factor as per the recommendations of 7th Pay Commission", Union minister of state in the ministry of finance Pankaj Chaudhary has said, “The Central government not actively considering any such plan."
“The fitment factor of 2.57 was uniformly applied to all categories of employees only for the purpose of fixation of pay in the revised pay structure based in the recommendations of the 7th Central pay Commission,” he further added in a written reply to Rajya Sabha.
Earlier this month, the Union government has increased the Dearness Allowance and Dearness Relief of central government employees and pensioners to 28 per cent from 17 per cent. The move comes at a time when retail inflation has remained over 6 per cent for the two straight months. The surge in allowance will help millions of beneficiaries to cope up with rising food and oil prices amid coronavirus pandemic. The revised DA will be come into effect from July, 2021.
A Dearness Allowance is a sum paid to central government employees and pensioners, in an attempt to offset the rising inflation in the country. Inflation drives prices at different rates across the country, depending on the location. Therefore, based on the location of the employee and the rate of inflation at that time of the year, the DA is calculated accordingly. DA has been included to compensate for price rise or inflation in a particular financial year since 1996. It is revised twice every year – in January and July.
In the wake of coronavirus outbreak in the country, the central government stalled the hike in dearness allowance last year. In July, the DA was hiked to 28 per cent. A central government employee who gets Rs 18,000 per month, will see a hike of 11 per cent in his take-home salary. His salary will jump by Rs 5,040 from July. The Dearness Allowance from January 1, 2020 to June 30, 2021 will remain 17 per cent for government employees. The finance ministry stated that no arrears will be paid from January 1, 2020 to June 30, 2021.
Commenting on Centre’s decision to raise dearness allowance of the central government employees, Sajai Singh, Partner, J Sagar Associates, said, “This is a welcome move since coronavirus has really shaken the economic foundation of the country and DA is paid to offset inflation. Inflation affects the price of everything and it’s impact may vary marginally from location to location, so hopefully this jump will bring relief to the beneficiaries."