7th Pay Commission: Possible Increase in DA for January-June 2024, Projected at 50%

As is the tradition every year, the Modi government considers increasing the dearness allowance (DA) and dearness relief for over 48 lakh central employees and 68 lakh pensioners in the last week of March. However, due to the Lok Sabha elections scheduled between April and May 2024, the government may need to make this decision earlier, potentially between January and February.

When to Expect DA Increase:

• In 2022 and 2023, the government announced DA increases on March 30 and March 24, respectively.
• The 2024 Lok Sabha election dates are expected to be announced in the first week of March, after which the election code of conduct will restrict policy decisions.
• To avoid this restriction, the government may decide to increase DA for the January-June 2024 period before the election code of conduct comes into effect.

Expected Increase in DA:

• The All India Consumer Price Index for Industrial Workers, a crucial factor in determining DA and dearness relief, saw a 0.9% rise in October.
• Based on these figures, it is projected that DA and dearness relief for January-June 2024 could increase by up to 4%, taking DA from the current 46% to 50%.

Merger of DA with Basic Pay:

• There have been ongoing discussions and reports suggesting that after DA reaches 50%, it may be merged into basic pay, reducing DA to zero and initiating a new cycle.
• However, no such merger is recommended by the Seventh Pay Commission, and similar recommendations were absent in the Sixth Pay Commission.
• The government has denied reports of forming the 8th Pay Commission after the DA reaches 50%.

It remains to be seen how the government navigates this decision-making process, keeping in mind both the financial well-being of employees and the political landscape leading up to the elections.