The government is likely to announce a hike in dearness allowance to 90 per cent from existing 80 per cent in September, benefiting about 50 lakh central employees and 30 lakh pensioners ahead of the festival season.
According to official sources, the preliminary assessment suggests that dearness allowance hike will be in the range of 10-11 per cent and would be effective from July 1 this year.
He said the exact number could be calculated only when the revised all India Consumer Price Index for Industrial Workers (CPI-IW) for the month of June will be released on August 30.
According to the provisional data released by government on July 31, the retail inflation for factory workers for the month of June stood at 11.06 per cent, higher than 10.68 per cent in May this year.
As per the practise, the government uses CPI-IW data for past 12 month or a year to arrive at a number for the purpose of any DA hike. Thus, the retail inflation for industrial workers between July, 2012 to June 2013 would be used to take final call on the matter.
“It would be around 10 per cent this time and would be announced in September,” Confederation of Central Government Employees Secretary General K K N Kutty told PTI.
“Besides, raising DA to 90 per cent, the government should merge 50 per cent of the allowance with the basic pay as was our demand. DA breached 50 per cent benchmark long ago”, he said.
As per the practise, the DA is merged with basic pay when it breaches the 50 per cent mark. DA merger helps employees as their other allowances are paid as a proportion of basic pay.
Kutty said, “This DA hike won’t help much as actual rise in the cost of living is 171 per cent since January 1, 2011.”
There would be a double digit hike in DA after about three years. It was last in September, 2010 that the government had announced a hike of 10 per cent to be given with effect from July 1, 2010.
DA was hiked to 80 per cent from 72 per cent in April, 2013, effective from January 1, this year.
Source – The Economic Times