DA hike news today: The central government has given a big gift to its employees before Diwali. The government has decided to increase Dearness Allowance (DA) by 4%. This increase will be applicable from July 2023. This decision will benefit about 48 lakh central employees and 68 lakh pensioners.
This DA hike will significantly increase the salary of central employees. This will increase their purchasing power and will also boost the market during the festive season. This step of the government has become a cause of joy for the employees and will help their families in making the festival of Diwali even more special.
What is DA Hike and its importance
DA or Dearness Allowance is an allowance that is given to government employees and pensioners to provide relief from inflation. This is in addition to their basic salary and is changed from time to time according to the inflation rate.
Importance of DA Hike:
- It maintains the purchasing power of the employees
- Reduces the effect of inflation
- Helps in improving the standard of living of employees
- Helps in increasing demand in the economy
| DA Hike information | Description |
| percentage of increase | 4% |
| effective date | July 2023 |
| beneficiary employee | about 48 lakhs |
| beneficiary pensioner | about 68 lakhs |
| old DA percentage | 42% |
| New DA percentage | 46% |
| sanctioning body | Union Cabinet |
| implementing ministry | Ministry of Finance |
How much will employees benefit from DA Hike?
This DA Hike will significantly increase the salary of central employees. Its impact will vary at different salary levels.
- Minimum wage employees will get a benefit of around Rs 720 every month.
- Employees with the highest salary can get benefits of up to Rs 2,880 every month.
- Pensioners will also get benefits in the same proportion
This increase has brought great relief to the employees, especially during the festive season. This will increase their purchasing power and they will be able to celebrate the festival with their family in a better way.
Impact of DA Hike on the economy
The impact of DA Hike is not limited to the employees only, but it impacts the entire economy.
- Demand will increase in the market: Increased income of employees will increase the demand for goods and services in the market.
- Benefit to retail sector: This increase in the festive season is good news for retailers.
- Increase in production: Increased demand will increase production, which will help in employment generation.
- Savings and Investments: Some employees may put this extra amount into savings or investments.
- Burden on the government exchequer: However, this increase will also put additional burden on the government exchequer.
How is DA Hike calculated?
DA Hike is calculated based on a special formula. It is based on the Consumer Price Index (CPI).
- DA is reviewed every 6 months
- DA increases by 1% for every 1% increase in CPI
- Percentage of DA applied on basic pay
For example, if an employee’s basic salary is Rs 20,000 and DA is 46%, then:
DA = 20,000 × 46% = Rs 9,200
In this way, the employee will get an additional Rs 9,200.
History of DA Hike and comparative study of previous years
DA Hike was started in India after independence. This was a way to provide relief to government employees from inflation.
DA Hike Percentage in Last Few Years:
| Year | DA percentage |
| 2019 | 17% |
| 2020 | 21% |
| 2021 | 28% |
| 2022 | 38% |
| 2023 | 46% |
It is clear from this table that there has been a continuous increase in DA in the last few years. This increase has been made according to the inflation rate.
DA Hike and other allowances
Apart from DA, government employees also get many other allowances. Some of the prominent ones are:
- House Rent Allowance (HRA)
- Traveling Allowance (TA)
- City Compensatory Allowance (CCA)
- education allowance
- conveyance allowance
DA Hike also affects these allowances. Some allowances are decided on the basis of percentage of DA. Therefore when DA increases, these allowances also increase.
DA Hike and Tax
DA Hike also has an impact on the taxes of employees. DA is considered part of salary and is subject to income tax.
- Increasing DA increases the total taxable income.
- This may push some employees into higher tax slabs
- However, the increased income is still profitable after tax.
Employees should update their tax planning in accordance with the DA Hike.
DA Hike and Pension
DA Hike impacts not only current employees but also pensioners.
- Pensioners also get the benefit of DA
- Their pension increases as per DA
- This is a big relief for old pensioners
This time’s DA hike will benefit about 68 lakh pensioners. This will help in providing financial security for them in old age.
DA Hike and female employees
The benefit of DA Hike is equally available to male and female employees. However, it may have some special effects on female employees:
- increased economic freedom
- opportunity for a better quality of life
- Ability to spend more on children’s education and health
This increase is a small but important step towards women empowerment.
DA Hike and the rural economy
DA Hike impacts urban areas as well as rural economy.
- Income of government employees working in rural areas will increase
- This will increase demand in rural markets
- Local trade and services will get a boost
- Will help in rural development
This increase can help reduce the economic gap between rural and urban areas.
DA Hike and State Governments
The announcement of DA Hike by the Central Government also puts pressure on the State Governments.
- Many state governments follow the Centre’s decision
- Some states increase DA according to their financial resources
- State government employees also benefit from this
However, the economic condition of every state is different, so the percentage and timing of DA Hike may vary.
