Central employees won’t have to wait much longer for an increase in their Dearness Allowance (DA), and pensioners can also expect a boost in their Dearness Relief (DR) soon. A final decision on this matter is set to be made in the upcoming Union Cabinet meeting. If it gets the green light, the new DA will take effect from January 2025, meaning employees will receive two months’ worth of DA arrears along with their March salary.
However, the expected increase in DA might only be around 2%
For the past few years, the central government has typically announced DA hikes around Holi. This time, though, employees might be let down by the modest increase. According to the All India Consumer Price Index (AICPI) data, a mere 2% rise in DA is anticipated, which would be the lowest in the last seven years.
Since July 2018, the government has consistently raised DA by at least 3% or 4%, with some increases even higher. Therefore, a 2% increase could leave central employees and pensioners feeling disappointed.
During the Covid-19 pandemic, the government paused DA hikes for 18 months, from January 2020 to June 2021. Employee unions have been advocating for compensation for that period since three DA hikes were skipped. It’s worth noting that DA adjustments occur twice a year: once in March for the January to June period and again in October-November for the July to December period.
Since January 2016, when the 7th Pay Commission’s recommendations took effect, the dearness allowance (DA) has climbed to 53% following the latest adjustment for the July-December 2024 period. The government had previously announced a 3% increase in October last year, bringing the DA to this level. Looking ahead, based on the AICPI data for the upcoming months, there’s a possibility of a 2% rise in DA for the January to June 2025 period.
Lowest DA increase since July 2018
This anticipated 2% increase would mark the smallest adjustment since July 2018, occurring over the last 78 months. The last time the DA saw such a minimal increase was from July to December 2018, where it also rose by just 2%.
First DA hike following the 8th Pay Commission announcement
This DA hike is particularly noteworthy as it will be the first one after the announcement of the 8th Pay Commission. The government revealed the establishment of the 8th Pay Commission on January 16, 2025, with its recommendations set to take effect from January 1, 2026. This means there will only be one more DA increase under the 7th Pay Commission, expected at the end of this year.