Cabinet approves 2% Dearness Allowance hike from January 2025

The Union Cabinet chaired by Prime Minister Narendra Modi on Friday approved a 2% increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners.

"The Union approved to release of an additional instalment of DA to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 01.01.2025 representing an increase of 2% over the existing rate of 53% of the Basic Pay/Pension, to compensate against price rise."

This will benefit about 48.66 lakh Central Government employees and 66.55 lakhs pensioners.

With this revision, DA will rise from 53% to 55%, providing a salary boost for employees ahead of the anticipated 8th Pay Commission.

The combined impact on the exchequer on account of increase in both Dearness Allowance and Dearness Relief would be Rs. 6614.04 crore per annum.

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

The last increase occurred in July 2024, when DA was raised from 50% to 53%.
 

What is DA?

Dearness Allowance (DA) is a financial benefit provided to government employees to offset inflation and ensure their salaries remain in line with rising living costs.

While basic salaries are determined by a pay commission every 10 years, DA ensures periodic adjustments to help employees manage inflation.