The recent development witnessed approval by the Union Cabinet and Prime Minister Narendra Modi for a 2% increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. From January 1, 2025, this modification raises the DA from 53% to 55% of the basic pay or pension.
Understanding Dearness Allowance
Dearness Allowance, as it is called, is provided to the central government employees and pensioners as a cost of living adjustment to absorb the loss of their wage or pension, owing to inflation. It is calculated as a percentage of basic pay and is adjusted periodically according to the All India Consumer Price Index (AICPI).
Financial Implications for Employees and Pensioners
A basic pay of Rs. 18000 increases by 2 percent or Rs. 360 extra per month for employees. Therefore, the total arrears amount to Rs. 1,080 between January to March. Similarly, those pensioners who have a basic pension of Rs. 9000 will get an increase of Rs. 180 in their monthly pension, hence getting delayed payment of Rs. 540. the same period.
Release of Arrears
The increased DA arrears for the months of January through March 2025 will be paid along with the salary or pension for April 2025. Employees and pensioners will receive the revised and all due amounts in the April payout.
State Government Employees
After the hike announced by the Centre, many state governments too have declared an increase in DA for their employees and pensioners. For example, the government of Rajasthan declared a 2% increase in the DA to raise it from 53% to 55% for about 8 lakh employees and 4.4 lakh pensioners.
Future Projection
As expected, the next revision of DA would take place in November 2025, applicable from July 2025 with retrospective effect. This DA revision would be the last under the 7th Pay Commission as the 8th Pay Commission starts functioning from January 2026.
Conclusion
The government has provided a 2% hike in Dearness Allowance recently, which indicates how the government looks after its employees and pensioners during tough times of increasing cost of living. Beneficiaries are advised to keep on receiving the latest news on further revision of DA, as well as on the introduction of the 8th Pay Commission to get their understanding of the financial implications for them in the future.
