7th Pay Commission Update: Even as dearness allowance (DA) has touched 50 per cent of the basic pay after the latest 4 per cent hike, there will be an automatic increase in children’s education allowance, hostel subsidy, retirement gratuity and death gratuity, by 25 per cent, according to latest government clarifications.
The Department of Personnel & Training (DoPT) recently received various references from various quarters with regard to the amount of children’s education allowance and hostel subsidy admissible consequent upon enhancement of dearness allowance payable to central government employees @ 50 per cent, with effect from January 1, 2024.
Clarifying on this, the department through an office memorandum issued on April 25 said the limits of children’s education allowance and hostel subsidy “would be automatically raised by 25 per cent every time the dearness allowance on the revised pay structure goes up by 50 per cent”.
On March 7, the Union Cabinet approved a 4 per cent hike in dearness allowance (DA) to 50 per cent of the basic pay. The 4 per cent DA hike, which will benefit over one crore central government employees and pensioners, has become effective from January 1, 2024. Apart from this, HRA was also increased for the employees.
As the DA has reached 50 per cent of the basic pay, various central government bodies, including railways unions, have started raising demands for constituting the 8th Pay Commission.
In a separate notification on gratuity, the Ministry of Labour and Employment in an Office Order dated April 30, 2024, said “As per para 6.2 of the OM no. 38/3712016-P&PW(A)(1) dated 04.08.2016 issued by Department of Pension and Pensioners’ Welfare, Ministry of Personnel, Public Grievances and Pensions, Government of India, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25 per cent whenever the dearness allowance rises by 50 per cent of the basic pay. Accordingly, the maximum limit of Retirement gratuity and death gratuity shall be increased by 25 per cent to Rs 25 lakh from existing Rs 20 lakh on account of revision of dearness allowance payable to central government employees to 50 per cent of the basic pay w.e.f 1.01.2024, subject to other conditions mentioned in the DoP&PWOM dated 04.08.2016.”
DA is given to government employees, while DR is given to pensioners. DA and DR are hiked twice a year, with effect from January and July.
The DA and DR hike is decided based on the percentage increase in the 12-month average of the All-India CPI-IW. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September/October.
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
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