DA hike for Central Govt employees

 The Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners in India was hiked by 2% effective from January 1, 2025. This increase raises the DA from 53% to 55% of basic pay or pension, as approved by the Union Cabinet chaired by Prime Minister Narendra Modi on March 28, 2025. The decision benefits approximately 48.66 lakh employees and 66.55 lakh pensioners, with an estimated annual cost of ₹6,614.04 crore to the government.

This hike is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), which tracks inflation and cost of living. The AICPI-IW for December 2024 was reported at 143.7, down by 0.8 points from the previous month, contributing to the calculation of a 2% increase. The DA is revised biannually—effective January and July—though announcements often follow a lag, typically around Holi (March) or Diwali (October). For January 2025, the announcement came on March 28, meaning employees and pensioners will receive the increased amount along with arrears for January, February, and March in their April 2025 salary or pension.

For example, an employee with a basic salary of ₹18,000 (the minimum under the 7th Pay Commission) will see their DA rise from ₹9,540 (53%) to ₹9,900 (55%), an increase of ₹360 per month or ₹4,320 annually. Similarly, a pensioner with a minimum pension of ₹9,000 will receive an additional ₹180 monthly, or ₹2,160 yearly. For those at the maximum basic pay of ₹2,50,000 or pension of ₹1,25,000, the hike translates to ₹5,000 or ₹2,500 per month, respectively.

This 2% increase is the smallest since July 2018, reflecting a slight easing of inflation pressures, as seen in the AICPI-IW drop. Earlier hikes in 2024 were 4% (to 50% in March) and 3% (to 53% in October). The modest adjustment has sparked some discussion among employees, especially with the 8th Pay Commission announced on January 16, 2025, set to take effect from January 1, 2026. Until then, DA revisions will continue under the 7th Pay Commission framework.