A Gift From Finance Ministry to Employees: Revised Rates of Dearness Allowance, Percentage Rate Increased

 The Ministry of Finance’s Department of Expenditure released an Office Memorandum on April 3, which discloses the revised rates of Dearness Allowance to Central Government employees.

 Contents of The Memo

The memorandum states that the Dearness Allowance payable to Central Government employees shall be increased from the current rate of 38% to 42% of the Basic Pay. It also clarifies that Dearness Allowance shall continue to be a distinct element of remuneration, removing it from the ambit of ‘pay’ under Fundamental Rule 9(21). The Department of Expenditure that has come out with these, also stated that payment on account of Dearness Allowance that involve fractions of 50 paise and above are required to be rounded to the next higher rupee, while fractions of less than 50 paise are to be ignored.

It is important to note all of these regulations will also apply to civilian employees who are paid from the Defence Services Estimates. The expenditure out of this shall be chargeable to the relevant head of the Defence Services Estimates. Separate orders will be issued for Armed Forces personnel and Railway employees by the Ministry of Defence and Ministry of Railways respectively.

For the persons serving in the Indian Audit and Accounts Department, these orders released by the Ministry of Finance have been issued in consultation with the Comptroller and Auditor General of India, a requirement under Article 148(5) of the Indian Constitution.

What Is Basic Pay?

Basic Pay refers to the minimum remuneration that an employee is entitled to, under the prescribed level in the Pay Matrix as per the recommendations of the 7th Central Pay Commission (CPC), and is accepted by the Government of India. Basic pay, which does not include any other type of pay such as special pay, is used as the basis for calculating various allowances and benefits granted to employees.

Last year, there were estimations of a 3 percent increase in DA, if the index of December 2022 remained constant, propelling it to reach 41 percent under the 7th Pay Commission.

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