DA Arrears: Good news for government employees. They’ll soon receive their back pay along with the dearness allowance. The arrears for three months will be paid out together. Recently, the central government updated the dearness allowance for employees, increasing it by 2 percent. Starting January 1, 2025, the dearness allowance will rise from 53 percent to 55 percent.
However, this 2 percent hike is the smallest increase seen in the last seven years. The government approved this adjustment at the end of March, so payments will be made in April. This change will benefit around 48.6 lakh employees and 66.5 lakh pensioners of the central government, resulting in an annual cost of Rs 6,614 crore for the government.
When and how much will they receive?
The new dearness allowance (DA) takes effect from January 1, 2025, and employees will also receive arrears for January, February, and March 2025. For those with a basic salary of Rs 18,000, this means an extra Rs 360 each month, totaling Rs 1,080 in arrears for the three months. This amount will be included in the April salary. Pensioners with a basic pension of Rs 9,000 will see an increase of Rs 180 per month, leading to Rs 540 in arrears for the three months. The DA is adjusted twice a year, once in January and again in July. The next adjustment will cover July to December 2025, which is typically announced around October or November 2025.
Why was the DA increased by only 2%?
The increase in DA/DR by 2% since January 2025 is based on the All India Consumer Price Index (CPI-IW). In December 2024, the AICPI-IW stood at 143.7 points, which brought the DA calculation to 55.98%. However, according to government regulations, the decimal portion is not included in the dearness allowance, resulting in the increase being rounded down to 55%.
In recent years, the dearness allowance (DA) has typically risen by about 3 to 4 percent. However, for the first time in 78 months (which is 6 and a half years), the DA was only increased by 2%. The last time this happened was back in 2018 when the DA also saw a 2% hike. Since then, the increases have consistently been in the 3 to 4 percent range. Before the new pay commission was put into effect, a higher DA meant more benefits for employees. Now that the 8th Pay Commission has been announced, the mere 2% increase in DA right after this announcement feels inadequate to many employees.
Is there a chance that dearness allowance could be eliminated?
With the rollout of the 8th Pay Commission, the way dearness allowance is calculated might change again. There are talks about merging the DA into the basic salary, which would reset the salary structure and start the DA calculation from scratch. However, this will ultimately depend on the panel’s recommendations. According to some sources, when the government rolls out the 8th Pay Commission, it might also change the base year used for calculating dearness allowance, which would mean starting the DA calculation from zero once more.