Centre to hike DA by 5% from 1 July

New Delhi: The Centre is likely to announce a hike of 5% in dearness allowance (DA) for its employees and pensioners in the month of September. The hike will be effective from July 1, 2019.

Finance Minister Nirmala Sitharaman

If the central government decides to hike the DA, it would be at 17 percent — the highest dearness allowance since 2016.

However, CPI statistic for June 2019 is still awaited, which will be released by the end of July.

As per an agreed upon formula, the Centre hikes the allowance taking 12-month average of retail inflation. The government does not consider the price rise rate beyond a decimal point for deciding the rate of the dearness allowance.

The central government had increased the DA by 3 per cent from January. At that time, AICPI was 307, which means, the DA was 12.78 per cent on a monthly basis.

It should also be noted here that if the index is increased by two points in the month July, then the DA calculation will be based on 17 percent.

The dearness allowance is paid as proportion of the basic pay of the central government employees.

Earlier last year September, the government hiked DA from 7 per cent to 9 per cent of basic pay from July 2019.

At present the central government employees and pensioners are entitled to 12% dearness allowance, which was effected from 1 January, 2019.