DA will reach 90% by next DA hike

After long wait, the central government employees have finally got the approval for the hike in the dearness allowance. The government has announced the hike in the dearness allowance following the cabinet approval. The central government employees and the pensioners will be eligible for an 8% hike i.e. DA of 80% from January 2013. About 50 lakh employees and 30 lakh pensioners are to benefit from this hike. The employees and pensioners will be eligible for arrears for the three months.

The hike comes after a long wait. The staff associations have threatened protests on April 23 against the delay in DA hike. This was the first time since 1986, since the concept of Dearness Allowance was introduced for the central government employees, the announcement got delayed by almost four months.

Eventhough the hike is announced, the demand for the DA merger with the basic remains as main unresolved issue. As per usual practice, DA is merged with basic pay when it breaches the 50% cap. This helps employees get higher allowances as those are paid as proportion of the basic pay. Various unions including the Confederation of Central Government Employees while welcoming the move, demanded the merger. We demand that they should merge up to 50 per cent DA with the basic pay as per the practice and set up the seventh pay commission at the earliest", Secretary of Confederation , K K N Kutty said. As per the practice, the DA is merged with basic pay when it breaches the 50 per cent cap. This helps employees get higher allowances as those are paid as proportion of the basic pay. 

The next DA hike that will be effective from July 2013 will be announced around September end. It is expected that the DA will be 90% then

DA 80% What if >100%

DA reached 80% – what will happen, if DA crosses 100%

What will happen DA reaches 100%..!

At present DA is getting ready to touch 80% level. We can expect that it will reach to 100% level near future.

Dearness Allowance Vs Price Rise

The central government employee’s confederation opined that The Dearness allowance which the cg employees are receiving now is not enough to meet the price rise of essential commodities. (see here)

The retail price of those commodities which go into making of minimum wage have risen by about 160% between 1.1.2006 to 2011 in comparison to D.A. compensation, which on the date had been just 51%

The effect of 50% Dearness allowance on our Pay

The sixth pay commission recommended that Whenever the DA reaches 50% level , Some allowances have to be increased by 25 % . Where as in Fifth CPC , it had been recommended when the DA reaches 50 % it should be merged with Basic Pay. It has been implemented with effect from 2004. And the fifth cpc also recommended that the Pay and Allowance should be revised after every five years. But it was not accepted by the Government.

The objectives of increasing Allowances by 25% as per the 6 CPC or merging DA with Basic pay as in the case of 5CPC, when ever DA reaches 50%, is to make the central government employees to balance the financial burden caused by Price Rise through increasing their pay package.

The impact of DA Reaches 100%

According to fifth CPC the 50 % DA had been merged with Basic Pay and in 6CPC , some allowances have been increased by 25%. But 5CPC didn’t say anything about what should be done when DA touch 100% level. Because the govt servants receiving their pay as per pre revised pay were not granted merging of another 50% of DA in 5CPC scale.

7th Pay commission

Even after the rate of DA is increased to 50% level it is not enough to increase some allowance by 25% as it will not help to handle the expenses caused by inflation. So The central government employees are expecting that government should constitute 7th pay commission immediately.

Source: www.govtempdiary.com
[http://www.govtempdiary.com/2013/03/what-will-happen-da-reaches-100/]