A very big and encouraging news has come out for the Central Government employees! The Central Government has decided to increase their Dearness Allowance (DA) by a full 2%. This decision has also been approved by the Union Cabinet. After this new increase, the DA of central government employees will now increase from 53% to 55%.

This news is no less than a lifesaver for the employees suffering from inflation. This increase before the formation of the 8th Pay Commission will provide them great relief. Earlier, the Central Government had increased the Dearness Allowance by 3% in July 2024, from 50% to 53%. This decision of the government was being widely anticipated and it is in line with expectations.

Great announcement of relief from inflation

The main objective of increasing the dearness allowance for central employees is to provide them relief from rising inflation. Employees are given Dearness Allowance (DA) based on their current inflation rate and basic salary, while pensioners get Dearness Relief (DR). Their basic objective is to reduce the burden of inflation on employees and pensioners.

The government changes it twice a year based on the inflation rate. The new rates of dearness allowance are applicable for the half year from January to June and then for the half year from July to December. The benefit of the dearness allowance announced by the government is available only to government employees and those working in Public Sector Undertakings (PSUs) i.e. government companies. Private sector employees do not get benefits.

Read More:- Bad News for ATM Users, Withdrawal Fee Hiked to ₹23 Per Transaction

Read More:- Bank Rules Changing from April: Free ATM Withdrawals Cut, FD Rates Revised

Who will get the benefit of the DA hike

The benefit of dearness allowance announced by the government will be available only to the following employees and pensioners:

All regular employees of the Central Government.

All pensioners of the Central Government.

Employees working in Public Sector Undertakings (PSUs) i.e. government companies.

Private sector employees will not get any benefit of this increase. This scheme is specially designed to provide financial assistance to government employees and pensioners.

This time there was a slight delay in the DA hike

Usually, the government announces the January-June hike before Holi and the July-December hike before Diwali. But this time the January-June 2025 hike could not be done on time. Based on the July-December 2024 data of the All India Consumer Price Index (CPI), it was already being estimated that given the level of inflation, this time there could be a 2% increase in DA, which could increase the DA rate from 53% to 55%.

Usually, the dearness allowance is revised twice a year, while every 10 years, a new pay commission is constituted to revise the pay scale of government employees. Under this tradition, the government has decided to constitute the 8th Pay Commission. But the commission has not been constituted yet.

Will dearness allowance be merged into basic pay

Usually, when the dearness allowance (DA) of employees and dearness relief (DR) of pensioners exceeds 50 percent, it is merged into basic pay and pension. But there has been no indication from the government to do so yet. The government recently clarified in Parliament that it has no intention to merge DA and DR into basic pay. This clarification puts an end to speculations that DA would be merged into basic pay before the 8th Pay Commission.

Read More:- PNB KYC Update: RBI’s New Rule Requires Customers to Act Before April 10