New Delhi: The Union Cabinet on Friday increased the Dearness Allowance (DA) by 2 percentage points effective from January 1 this year, benefitting nearly 1.15 crore central government employees and pensioners.
The Union Cabinet has approved the release of an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners with effect from January 1, 2025, representing an increase of 2 per cent over the existing rate of 53 per cent of the basic pay/pension, to compensate against price rise, said Information and Broadcasting Minister Ashwini Vaishnaw after the Cabinet meeting.
The combined impact on the exchequer on account of the increase in both DA and DR would be Rs 6,614.04 crore per annum.
The hike is applicable from January 1, 2025, and will benefit more than one crore employees and pensioners. It should be noted that the April salaries will carry the raised DA along with arrears for the previous three months (January- March 2025), as the announcement was delayed.
On a 2% DA hike, the salary of the entry-level central government employee, who has a basic salary of around Rs 18,000 per month, will increase in the range of Rs 360 per month, effective from January 1, 2025.
If somebody’s salary is Rs 30,000 per month and has Rs 18,000 as the basic pay, he or she now gets Rs 9,540 as dearness allowance, which is 53 per cent of the basic pay. However, after the expected 2 percent hike, the employee will get Rs 9,900 per month, which is Rs 360 higher.
However, in case of 3 percent DA hike, the employee will get an increase of Rs 540 in dearness allowance to Rs 10,080 per month.
7th Pay Commission: The Previous DA Hike
In the previous DA hike in October 2024, the central government employees received a DA hike of 3 percent, with effect from July 1, 2024. After the hike, the DA had increased from 50 percent to 53 percent of the basic pay. Pensioners also received the same hike in dearness relief.
The DA hike, which is announced twice a year (with effect from January and July), raises the take-home salaries of central government employees as per the inflation rate.
DA is given to government employees, while DR is given to pensioners.
How Is the DA Hike Calculated?
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.
In 2006, the central government revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
