Cabinet Approves 2% Hike in DA for Government Employees

On March 28, 2025, the Union Cabinet, chaired by Prime Minister Narendra Modi, approved a 2% increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. This hike, effective from January 1, 2025, raises the DA from 53% to 55% of Basic Pay/Pension, benefiting approximately 48.66 lakh employees and 66.55 lakh pensioners. The revision follows the established formula based on the 7th Central Pay Commission’s recommendations and aims to counter inflationary pressures.

Key Points

Increase in DA/DR

• DA and DR increased by 2% from 53% to 55% of Basic Pay/Pension.
• Effective date: January 1, 2025.

Beneficiaries

• 48.66 lakh central government employees.
• 66.55 lakh pensioners.

Financial Impact

• Estimated burden on the exchequer: ₹6,614.04 crore per annum.

Background

• DA is revised twice a year (January and July) based on the All India Consumer Price Index for Industrial Workers (AICPI-IW).
• Last increase: July 2024, when DA rose from 50% to 53%.
• The increase aligns with the 7th Central Pay Commission’s recommendations.

Purpose

• DA is designed to offset inflation and maintain the real value of government employees’ salaries.
• Anticipation of the 8th Pay Commission has increased interest in DA hikes.