7th Pay Commission: The anticipated announcement regarding the Dearness Allowance (DA) increase was expected prior to the Holi festival; however, it did not materialize. Based on the All India Consumer Price Index (AICPI) for the period of July to December 2024, a 2 percent increase in DA is projected. This would mark the smallest increment since July 2018. To illustrate, if an employee’s basic salary is Rs 18,000, a 2 percent rise would result in an additional Rs 360 to their salary.
Currently, the DA stands at 53 percent, having seen a 3 percent increase in October 2024. Should the new DA rise by 2 percent, it would reach 55 percent. Some analysts suggest that the government might opt for a more substantial increase of 3 to 4 percent, given that the Reserve Bank of India (RBI) has projected an inflation rate (CPI) of 4.8 percent for the current fiscal year. Ultimately, the DA increase is intended to enhance the financial well-being of employees and pensioners, thereby mitigating the effects of inflation.
Will be on effect from January 1
This adjustment will take effect from January 1, 2025, and employees will also receive arrears for this duration. This will be the first DA increase following the announcement of the 8th Pay Commission in January 2025. The tenure of the 7th Pay Commission will conclude in December 2025, with the new Pay Commission’s recommendations set to be implemented from January 2026.
Probable DA hike
The assessment of the DA hike is based on the All India Consumer Price Index (AICPI). According to the data for July to December 2024, a 2 percent increase in DA is anticipated. For an employee with a basic salary of Rs 18,000, this would translate to an increase of Rs 360. Conversely, a 3 percent increase would raise the salary by Rs 540. It is expected that the new Pay Commission will submit its report to the government before January 1, 2026, allowing for the implementation of the 8th Pay Commission’s recommendations in the subsequent financial year.