As the new year approaches, central government employees eagerly await a hike in dearness allowance (DA). This increase is scheduled for January 2025. If implemented, it will support central employees in managing their regular expenses. However, experts believe there might be a delay in announcing the DA hike.
The dearness allowance (DA) is revised every six months based on the AICPI data, which reflects the cost of living. The Centre reviews the index for the January-June and July-December periods and announces revisions after evaluating the 12-month average AICPI.
The DA percentage is determined based on the 12-month annual AICPI growth ending in June. Although it is revised biannually, the announcements are often delayed. On October 16, 2024, the Union Cabinet approved a 3% DA hike, raising it to 53% and benefiting over one crore employees and pensioners. Earlier, a 4% hike in January 2024 increased the DA to 50%, but this was only announced in March.
How DA Increases
The formula for calculating DA is simple. For general employees, the DA percentage = ((Average AICPI for the last 12 months—115.76) / 115.76) x 100. The adjustments for central public sector employees may vary slightly, but the basic concept remains the same.
Expected Hike in January 2025
Based on current AICPI trends, the DA is expected to increase by 3% in January 2025. With the index likely to reach 144.5 by October 2024 and rise further, the DA could go up to 56%. If approved, it will provide significant financial benefits.
Benefits for Pensioners Too
For instance, an employee earning a minimum salary of Rs 18,000 will receive a hike of Rs 540, while an employee with a maximum salary of Rs 2,50,000 will see a benefit of Rs 7,500. Pensioners will also benefit, with an increase ranging from Rs 270 to Rs 3,750 depending on their pension amount.
The Index Rose to 144.5 in October
According to data released by the Labor Bureau on November 30, 2024, the AICPI index for October rose to 144.5. As a result, the DA is expected to increase by 3% in January 2025. Employees have been receiving a 53% dearness allowance since July 2024. With the additional 3% hike, the DA is likely to reach 56% from January 2025.
Employees and Pensioners to Benefit
Anurag Singh (Former stock analyst) stated that around 80 lakh central government employees and pensioners, along with over 50 lakh state government employees and pensioners, including those in Uttar Pradesh, will benefit from the DA hike. These projections are based on trends from the past 10 years. However, the possibility of the dearness allowance increasing by only 2% instead of 3% is now minimal.