Over 48 lakh employees and 66 lakh pensioners to benefit; annual exchequer burden estimated at Rs 6,614 crore
The Biz Reporter
New Delhi: In a significant relief to millions of central government employees and pensioners, the Union Cabinet approved a 2 per cent hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, with effect from January 1, 2025.
The hike represents an increase of 2 per cent over the existing rate of 53 per cent of the basic pay or pension, and is aimed at compensating employees and pensioners against the rising cost of living.
The Cabinet meeting was chaired by Prime Minister Narendra Modi.
Widespread Benefit
The move is expected to benefit approximately 48.66 lakh central government employees and 66.55 lakh pensioners across the country. The combined impact on the exchequer on account of the increase in both Dearness Allowance and Dearness Relief is estimated at Rs 6,614.04 crore per annum.
Salary and Arrears
With the latest revision, DA will rise from 53 per cent to 55 per cent, resulting in a salary increase for central government employees. Along with their April salaries, central government employees will receive arrears for January, February, and March 2025.
For those on a minimum basic salary of Rs 18,000, the hike translates to an additional Rs 360 per month, amounting to total arrears of Rs 1,080. Pensioners receiving a basic pension of Rs 9,000 will see an increase of Rs 180 per month, amounting to arrears of Rs 540.
Based on 7th Pay Commission Formula
This increase follows the accepted formula recommended by the 7th Central Pay Commission, which ensures that government employees and pensioners receive adequate financial support to cope with inflation.
Future Outlook
The government is expected to announce a second DA hike for the July-December period in October-November 2025. Once the Eighth Pay Commission’s recommendations come into effect, the DA will be merged with the basic salary, resetting it to zero, which will lead to a revised salary structure for government employees.
Dearness Allowance and Dearness Relief are revised twice a year, in January and July, to protect the real value of salaries and pensions from inflationary pressures.
