Another major update is revealed for government employees. Central government employees and pensioners might be in for some significant news about their dearness allowance next month. There’s a buzz that the government could announce a hike in the dearness allowance (DA) before Holi. However, this news might not bring the same level of excitement to employees as it has in the past. Let’s break it down.
When can we expect the announcement?
Right now, the 7th Pay Commission is active in the country, and the government has already set the wheels in motion for the 8th commission, which could kick off soon. Under the current 7th Pay Commission, DA/DR gets adjusted twice a year. The first adjustment happens on January 1, and the second on July 1. The first adjustment for 2025 is set to take effect from January 1, with an official announcement likely coming in March 2025.
What’s the difference between DA and DR?
Dearness Allowance (DA) is what current government employees receive, while pensioners get Dearness Relief (DR). Both are calculated based on the All India Consumer Price Index (AICPI). The government reviews and sets the rates for DA and DR every six months, using the average AICPI data. This means employees get to enjoy an increase in DA twice a year.
Lower than expected
The AICPI data from July 2024 to December 2024 will determine how much DA/DR will rise in January 2025. According to the Labor Bureau, the AICPI dropped by 0.8 points to 143.7 in December 2024. With inflation decreasing, it looks like there might be a 2% increase in DA this time around, whereas earlier, a 3% hike was anticipated. Currently, the DA stands at 53%.
How much of an increase are we looking at first?
The All India Consumer Price Index (AICPI) data from July to November 2024 suggested that the Dearness Allowance (DA) or Dearness Relief (DR) could rise by at least 3% in January 2025. However, after the December data was released, the chances of that happening have dropped significantly. Last October, the government raised the DA by 3%, bumping it up from 50% to 53%.
What will the benefits be?
According to the report, if the DA goes up by 2% in January 2025, government employees with a minimum basic salary of Rs 18,000 will see an increase of Rs 360. For pensioners, the boost would be Rs 180, given their minimum pension is Rs 9,000.
On the higher end, employees earning a maximum of Rs 2,50,000 and pensioners with a maximum pension of Rs 1,25,000 would see increases of Rs 5,000 and Rs 2,500, respectively, with a 3% DA hike. So, it’s likely that many won’t be too thrilled about the DA increase announcement.