DA Hike: On Friday, March 28, the Union Cabinet, which is headed by Prime Minister Narendra Modi, decided to pay central government workers an extra dearness allowance (DA) and pensioners dearness relief (DR) beginning January 1, 2025. Approximately 1.15 crore workers and retirees from the federal government would profit from the change.
As a measure to counteract price increases, the Cabinet has decided to pay central government employees and pensioners an extra instalment of DA and DR, respectively, starting from January 1.
This represents a 2% increase over the current rate of 53% of basic pay/pension, according to Ashwini Vaishnaw, Minister of Information and Broadcasting, who spoke after the meeting.
A worker’s DA will go up from 53% to 55% after this change, giving them a pay rise before the expected 8th Pay Commission. Wages and allowances for central government personnel were amended by the government’s 8th Pay Commission, which was authorised by the Centre in January.
The DA was previously increased by 3% in October and 4% in March of 2024. An increase on both DA and DR will have a cumulative annual effect on the exchequer of ₹6,614.04 crore. Around 66.55 million retirees and 48.66 million federal workers will profit from the change.
The 7th Central Pay Commission’s recommendations formed the basis for the generally recognised formula of the rate, which in turn led to the rise. Paying DA and DR helps keep pensions and workers’ wages stable in the face of inflation.
What is DA?
Government workers get a Dearness Allowance as a financial benefit to help offset inflation and keep their salary in line with increased living expenses. Inflation is managed by DA via periodic increases to basic wages, which are established by a pay commission every 10 years.
Since the 8th Pay Commission was announced, this is the first DA raise. The creation of the 8th Pay Commission was announced by the government on January 16, 2025. It will take effect from January 1, 2026.
The DA is increased by the government twice yearly. Each January and December, the All India Consumer Price Index (Industrial Workers) data is used to determine the DA rate modification, which happens every two years.
The rate of increase for DA and DR is determined by this important parameter. An important tool for gauging how industrial workers are affected by inflation is the index.