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7th Pay Commission: 2 important festive season announcements that will impact salaries

7th Pay Commission: The Dearness Allowance of central government employees is linked with CPI-IW. Any change in base impacts the dearness allowance

twitter-logoBusinessToday.In | October 19, 2020 | Updated 12:59 IST
7th Pay Commission: 2 important festive season announcements that will impact salaries
Centre is set to revise base year for CPI-IW this month

7th pay commission latest news: Though the entire Indian economy is going through a major crisis due to COVID-19, the central government employees may be in for a Diwali surprise as they may get DA (dearness allowance) hike in the months to come. The Centre is set to revise the base year for the consumer price index for industrial workers (CPI-IW), a move that is likely to benefit over millions of government employees, pensioners, and industrial workers.

The base year for the CPI-IW will be changed from 2001 to 2016 to reflect the new consumption pattern of recent times. The CPI-IW hasn't been revised since 2001, which ideally should be revised every five years. The index is used for computing both government staff's dearness allowance (DA), pensioners' dearness relief (DR) as well as industrial workers' salaries.

If this happens, the DA given to central government employees will be hiked, thereby providing benefit to over 48 lakh central government employees.  The DA of central government employees is linked with CPI-IW. Any change in base impacts the dearness allowance.

Union Labour and Employment Minister Santosh Kumar Gangwar is reportedly expected to release the new CPI-IW index, for September 2020, on Wednesday this week. However, the decision may not benefit the employees till 2021 as the Centre has fixed it at 17% till June next year in the wake of the coronavirus crisis.

In another development, Finance Minister Nirmala Sitharaman last week revived the "Festival Advance Scheme". The special Festival Advance Scheme will provide a one-time interest-free advance of Rs 10,000 to all officers and central government employees, irrespective of their position, ranks, and whether they are gazetted or non-gazetted officers.

The Rs 10,000 advance will come as a pre-paid Rupay card, which can be spent by March 31, 2021. The repayment will be in 10 instalments. It is expected Rs 4,000 crore will be disbursed under this scheme, according to the government.

Also read: BT Buzz: How the LTC cash voucher scheme will work for you?

Also read: Over 30 million industrial workers to get pay hike as Centre set to revise inflation index

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