Great news for central government employees and pensioners! During a Union Cabinet meeting led by Prime Minister Narendra Modi, a 2% increase in Dearness Allowance (DA) was approved. Union Minister Ashwini Vaishnav shared this update on Friday. This increase will take effect from January 1, 2025, but the full impact will be reflected in the April salary, which will also include back pay from January to March.
DA stands at 55%
With this adjustment, the DA for central employees rises from 53% to 55%. Employees earning a basic salary of Rs 18,000 per month will see a direct increase of Rs 360 in their DA. This means their DA will now be Rs 9,900, up from Rs 9,540.
The last increase occurred in October 2024
It’s important to note that the last DA hike was 3% in October 2024, effective from July 1, 2024, raising the DA from 50% to 53%. Pensioners also benefited from this increase in Dearness Relief (DR).
What is DA and why is it important?
Dearness Allowance is provided to government employees to help them cope with inflation. Pensioners receive a similar benefit known as Dearness Relief (DR). While the basic salary is set by the Pay Commission every decade, DA is adjusted every six months based on inflation rates.
How is DA calculated? Here’s the formula
DA and DR are determined using the 12-month average of the All India Consumer Price Index (AICPI), which reflects the spending habits of the general public. The formula, established in 2006, is as follows:
Dearness Allowance (%) = ((12 month average of AICPI – 115.76)/115.76) × 100
This formula is applicable to central government employees, with slight variations for public sector undertakings.