Central government workers and retirees may soon get some good news: the long wait for a raise in dearness allowance (DA) and dearness relief (DR) may soon be ended. The government will probably approve both the DA/DR hike and the Terms of Reference (ToR) for the 8th Pay Commission before Diwali.
The 8th Pay Commission will officially be formed once the ToR are approved. It will then talk to a number of people before making recommendations for the fitment factor and allowances for the next pay raise.
DA/DR Will Probably Go Up by 3%
DA and DR, which are allowances meant to make up for inflation, may go up by 3%, bringing them from 55% to 58% of the basic pay under the 7th Pay Commission framework. Over 1.2 crore employees and pensioners will benefit from the raise if it is approved.
There has been a lot of pressure on the Centre, even if they haven’t made an official statement yet. The Confederation of Central Government Employees and Workers (CCGEW) wrote to Finance Minister Nirmala Sitharaman earlier to tell her that employees were unhappy with the delay in the DA/DR raise.
Timeline for the 8th Pay Commission
Every ten years, pay commissions are set up to look at salaries and pensions. The panels usually take around 18 months to write their report, and then the government has 3 to 9 months to look it over before it is approved.
In January, the Union Cabinet gave the go-ahead for the 8th Pay Commission to be formed, although it hasn’t been officially set up yet. The Centre needs to approve the ToR before employee unions can move further. The ToR will be the commission’s main structure.
Brokerage estimates say that the new pay panel’s fitment factor might be anywhere from 1.8 to 2.46. This factor is what you use to figure out how much to raise someone’s compensation. But when the new commission goes into force, the dearness allowance goes back to zero. This means that the actual raise is less than what was first thought.