The central government is reportedly considering a rise in the dearness allowance (DA) for its vast workforce, comprising over one crore employees and pensioners. The proposed increase is expected to be three percentage points, taking the DA to 45 percent from its current rate of 42 percent. This enhancement adheres to the agreed formula for determining such adjustments.

The computation of dearness allowance for employees and pensioners depends on the latest Consumer Price Index for Industrial Workers (CPI-IW), which the Labour Bureau releases monthly.

The Labour Bureau operates under the Labour Ministry's jurisdiction. Shiva Gopal Mishra, the General Secretary of All India Railwaymen Federation, shared in a conversation with PTI that the June 2023 CPI-IW was published on July 31, 2023. They are demanding a four percentage point increase in the dearness allowance, but due to the government's policy not to consider hike beyond the decimal point, the actual rise in DA amounts to a little over three percentage points. Consequently, the DA is likely to be increased by three percentage points, reaching 45 percent.

The Finance Ministry's expenditure department will prepare a proposal outlining the hike in DA and its corresponding revenue implications, which will then be presented before the Union Cabinet for approval. The revised DA will be effective from July 1, 2023.

At present, more than one crore central government employees and pensioners receive a 42 percent dearness allowance. The previous revision in DA took place on March 24, 2023, and came into effect on January 1, 2023.

The Centre had raised the DA by four percentage points to 42 percent, aligning it with the percentage increase in the 12-month average of the All India Consumer Price Index, concluding in December 2022.

DA is provided to employees and pensioners as a means to offset the impact of rising prices, which is reflected in the CPI-IW. This allowance undergoes periodic revision twice a year.

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