The Centre is likely to hike dearness allowance (DA) to 125 per cent from existing 119 per cent, which would benefit its over 10 million employees and pensioners. “The average rate of Consumer Price Index-Industrial Labour from January to December, 2015 was 6.73 per cent. Thus, the Centre will increase dearness allowance by six percentage points to 125 per cent from existing 119 per cent as per accepted formula for calculation,” said Confederation of Central Government Employees and Workers (CCGEW) President K K N Kutty.
The new rate of DA will be implemented from January 1, 2016, which will be applicable for 4.8 million central government employees and 5.5 million pensioners. DA is paid as a proportion of basic pay of employees. The proposal to hike DA is moved by the Finance Ministry on the basis of accepted formula for calculation. The Union Cabinet approves the DA hike for its employees.
However, dissatisfied over the meagre hike in DA in the backdrop of high cost of living, Kutty said, “The real inflation ranges between 220-240 per cent, but we will get only 125 per cent.” The Centre revised DA twice in a year on the basis of one-year average of retail inflation for industrial workers as per the accepted formula.
Earlier in September last year, DA was increased to 119 per cent from 113 per cent which was effective from July 1, 2015. In April last year, the government had hiked DA by 6 percentage points to 113 per cent of their basic pay with effect from January 1, 2015.
Meanwhile, retirement fund body EPFO will not revise its interim interest rate of 8.8 per cent downward for the current financial year, Labour Minister Bandaru Dattatreya said on Friday. “We will not revise it (interim interest rate) downwards. The revision will be keeping in view the economic trend in the country, interest rates of various schemes as well as the 7th Pay Commission,” Dattatreya told reporters here.
Asked about the interim announcement, he said that the prevailing situations need to be analysed and after that the CBT will again meet in the future to decide the interest rate. The minister said the trade union had demanded an interest rate of 9 per cent, but paying at that rate would have left the retirement fund body with a deficit of Rs 102 crore.
The projected income of EPFO with a subscriber base of 4 crore is at Rs 34,844 crore, he added. EPFO’s advisory body Finance Advisory and Investment Committee (FAIC) had recommended that 8.95 per cent rate of interest on PF deposits for 2015-16 was feasible as it would leave a surplus of Rs 91 crore. Trade unions’ had demanded for 8.9 per cent interest rate, which would have left a surplus of Rs 285 crore. And in the case of 8.8 per cent, the surplus will be Rs 673 crore, the minister further said.
The Labour Ministry said as per provisions of the EPF (Employees Provident Fund) Scheme, 1952, EPFO is required to credit interest to each member as determined by the government in consultation with the CBT. In determining the rate of interest, Centre shall satisfy there is no overdrawal on the interest account as a result of crediting interest to the EPF members.