The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 2% increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners. This revision will be effective from January 1, 2025, raising the existing DA rate from 53% to 55% of the Basic Pay/Pension.
This increase aims to compensate for the rising cost of living, benefiting approximately 48.66 lakh Central Government employees and 66.55 lakh pensioners across India.
Financial Impact and Government Expenditure
The combined financial impact of this DA and DR hike on the government exchequer is estimated to be ₹6,614.04 crore per annum. The hike is implemented based on the accepted formula recommended by the 7th Central Pay Commission.
The last DA hike occurred in July 2024, when the allowance was raised from 50% to 53%. With the latest revision, employees will receive a salary boost, providing financial relief ahead of the anticipated 8th Pay Commission recommendations.
What is Dearness Allowance (DA)?
Dearness Allowance (DA) is a cost-of-living adjustment provided to government employees, public sector workers, and pensioners to counter the impact of inflation. It ensures that their purchasing power remains stable despite rising market prices.
While basic salaries are determined every 10 years through a Pay Commission, DA adjustments are made periodically to help employees cope with inflationary trends.
Key Highlights of the DA Hike:
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Effective Date: January 1, 2025
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Previous DA Rate: 53%
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Revised DA Rate: 55%
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Beneficiaries: 48.66 lakh employees and 66.55 lakh pensioners
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Financial Impact: ₹6,614.04 crore per annum
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Based On: 7th Central Pay Commission recommendations
