Big news for crores of central government employees. This week, the government is set to make a significant announcement that could benefit millions of employees and pensioners. Various media outlets are reporting that the central government might reveal a 2 percent increase in dearness allowance (DA) and dearness relief (DR) ahead of the Holi festival on March 14, 2025. The cabinet meeting scheduled for Wednesday is expected to be the platform for this announcement.
To give you some context, this salary boost falls under the 7th Pay Commission, which was put into effect on January 1, 2016, and will directly impact over 12 million central government employees and pensioners.
So, what’s the scoop?
Reports suggest that the DA for employees will rise from the current 53 percent of their basic pay to 55 percent. Prime Minister Narendra Modi is anticipated to finalize this decision during the Union Cabinet meeting. The last adjustment to the dearness allowance occurred in October 2024, when it was increased by 3 percent, bringing it up to 53 percent from 50 percent.
This latest hike, which is set to take effect from July 1, 2024, will also benefit pensioners. The dearness allowance is a crucial part of the salary for central government employees, while dearness relief is provided to those receiving pensions.
How is DA calculated?
According to a report from Bajaj Finserv, dearness allowance is a salary component designed to help government employees cope with inflation. The increase in DA is determined by the percentage rise in the 12-month average of the All India Consumer Price Index (AICPI), which serves as an inflation measure for the period ending June 2022.
Typically, the central government reviews these allowances in January and June each year, but the official announcements are made in March and September.