The Union Cabinet has approved a 2% increase in Dearness Allowance (DA) for Central Govt Employees and pensioners. With this hike, the DA rises from 53% to 55%, effective from January 1, 2025. This decision aims to help employees and retirees manage inflation and maintain their purchasing power.
Impact on Salaries
The increase in DA will directly boost salaries for nearly 48.66 lakh Central Govt Employees. For employees with a basic salary of Rs 18,000, this translates to an additional Rs 360 per month, or Rs 4,320 annually. Those earning Rs 30,000 as their basic salary will see their DA increase from Rs 15,900 to Rs 16,500, adding Rs 600 per month, or Rs 7,200 per year.
This raise is a relief for employees as living costs continue to rise. The increase will help them meet daily expenses, particularly as they await further salary revisions under the 8th Pay Commission, expected in January 2026.
Benefits for Pensioners
Alongside employees, 66.55 lakh pensioners will also benefit from this DA hike. A pensioner receiving Rs 9,000 as their basic pension will get an extra Rs 180 per month, adding up to Rs 2,160 per year. This adjustment is crucial for retirees who rely on their pensions to cover essential expenses.
With rising costs in healthcare, housing, and daily needs, the increased DA will provide some financial relief. However, many pensioners continue to hope for further adjustments in pension schemes to match inflation more effectively.
Arrears Payment in April
Since the increase is effective from January 1, 2025, employees and pensioners will receive arrears for January to March 2025. These arrears will be paid along with their April 2025 salary.
For an employee with a basic salary of Rs 18,000, arrears will amount to Rs 1,080 for three months. Pensioners with a basic pension of Rs 9,000 will receive Rs 540 in arrears. Employees with higher basic pay will get even bigger arrear payments based on their salary.
Financial Impact on Government
This DA hike will cost the government approximately Rs 6,614 crore annually. While this increase provides financial relief to employees and pensioners, it also puts pressure on the government’s budget. However, ensuring that salaries and pensions keep pace with inflation remains a priority.
The decision comes at a crucial time, as inflation continues to affect the cost of living. The government is also preparing for the 8th Pay Commission, which is expected to bring larger salary revisions. Until then, the DA hike serves as an interim relief measure for Central Govt Employees and pensioners.
What’s Next?
With this being the first DA hike since the announcement of the 8th Pay Commission, many employees are looking forward to further salary revisions. The Pay Commission’s recommendations, expected by January 2026, will likely bring more changes in salaries and benefits.
For now, this 2% DA hike ensures that employees and pensioners receive some financial relief. While it may not fully offset inflation, it is a step towards keeping salaries and pensions in line with the rising cost of living. Central Govt Employees can expect their increased salaries and arrears with their April 2025 paycheck, providing some much-needed support.