The Union Cabinet has approved a 2% DA hike for central government employees and pensioners. The increase takes effect from January 1, 2025, raising Dearness Allowance (DA) from 53% to 55%. Employees will receive their arrears for January to March 2025 in April, alongside their salaries.
This decision benefits around 48.6 lakh employees and 66.5 lakh pensioners. The hike aims to provide financial relief by adjusting salaries in line with rising inflation. The government will bear an additional cost of ₹6,614 crore annually due to this increase.
How Much Will Employees Get?
With the 2% DA hike, central government employees will see an increase in their monthly salaries.
- Employees with a basic salary of ₹18,000 will receive an extra ₹360 per month, totaling ₹1,080 in arrears.
- Those with a ₹50,000 basic salary will get an additional ₹1,000 per month, with arrears of ₹3,000.
- Employees earning ₹1 lakh basic pay will see an increase of ₹2,000 per month, with arrears of ₹6,000.
Pensioners will also benefit. Those receiving a basic pension of ₹9,000 will get an extra ₹180 per month, totaling ₹540 in arrears.
When Will the Arrears Be Paid?
The arrears for January to March 2025 will be paid along with the April 2025 salary or pension. Employees and pensioners can check their salary slips, bank statements, or online portals to verify the updated amount.
Impact on Other Allowances
The 2% DA hike increases the DA component of salaries but does not directly affect allowances like House Rent Allowance (HRA) and Travel Allowance (TA). However, HRA and TA are often revised separately when DA crosses certain thresholds.
For instance, if an employee’s HRA is 24% of basic pay, it will remain unchanged at ₹4,320 for ₹18,000 basic pay, unless revised in future announcements.
Government’s Financial Burden
The increase in DA and Dearness Relief (DR) for pensioners comes with a ₹6,614 crore financial impact on the government. This amount covers both employee salaries and pensions.
Upcoming DA Hike in July 2025
The next DA hike in July 2025 will be the last under the 7th Pay Commission. The 8th Pay Commission, effective January 2026, will reset DA to 0% by merging it into the basic salary. This will lead to higher base salaries and revised allowances.
Experts predict another 2-4% DA hike in July 2025, further increasing salaries before the 8th Pay Commission rollout.
Example Salary Calculation After DA Hike
For an employee with a basic salary of ₹18,000, the salary structure before and after the 2% DA hike is as follows:
| Component | Before (53% DA) | After (55% DA) | Increase |
|---|---|---|---|
| Basic Pay | ₹18,000 | ₹18,000 | – |
| DA | ₹9,540 | ₹9,900 | ₹360 |
| Total (Basic + DA) | ₹27,540 | ₹27,900 | ₹360 |
Similar increases will be reflected across different salary slabs. Pensioners will also see a proportionate increase.
Final Thoughts
The 2% DA hike provides financial relief to central government employees and pensioners, ensuring their income keeps pace with inflation. With arrears being credited in April 2025, beneficiaries can expect a small but helpful boost in their earnings.
The upcoming July 2025 DA hike and the transition to the 8th Pay Commission in 2026 will bring further changes. Employees should keep track of salary updates to understand how these revisions impact their overall income.