With the approval of a 2 percent increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners by the Union Cabinet chaired by Prime Minister Narendra Modi, the DA has now risen from 53 percent to 55 percent of basic pay or pension effective from January 1, 2025. This will directly benefit approximately 1.15 crore people. The move is aimed at combating the effects of inflation, as was recommended by the 7th Central Pay Commission.
Arrears Payment Schedule
Due to the timing of the announcement, the increased DA and DR would be credited to salaries and pensions for April 2025. In addition to this, the arrears for January to March 2025 would be released along with the payment in April, giving a lump-sum payment covering the three months to employees and pensioners.
Financial Implications
The latest 2 percent DA increase is the minimum increase in seven years, with previous hikes being in the range of 3 to 4 percent. For instance, the last increase was in July 2024, when the DA rose from 50 percent to 53 percent. The extra financial burden on the exchequer due to this increase will be approximately ₹6,614.04 crore every year.
Impact on Salaries and Pensions
The 2% hike is about ₹360 in additional pay for central employees having basic pay of about ₹18,000, which makes ₹1,080 in arrears for the three-month period from January to March 2025. For a pensioner drawing a pension of ₹9,000, the DA increase will mean an extra ₹180 a month, with this giving ₹540 in arrears for the same period.
State-Level Developments
In Himachal Pradesh, the Joint Employees Federation has urged the state government to release the 13% pending DA and associated arrears for the state employees. The federation has highlighted that the timely and fair disbursal of these dues would assist the employees in facing the rising cost of living.
Conclusion
The recent increase of 2 percent in DA and DR stands testimony to the government’s concern for its own employees and pensioners against rising prices. The increase, though measly by the standard of previous years, does offer some immediate benefit with a lump-sum payment of DA with arrears from January 2025. The question of 18-month DA arrears from 2020-2021 is still critical, with many still awaiting some final word from their government.
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