The federal authorities authorized a 2% Dearness Allowance hike for central government workers while also boosting Dearness Relief benefits to retired personnel. The Union Cabinet led by Prime Minister Narendra Modi introduced this decision through a March 28 public announcement making it effective starting from January 1, 2025. The hike will benefit over one crore employees and pensioners. Additionally, the April salaries will reflect the revised DA, along with arrears for the months of January to March 2025, due to the delay in the announcement.

Smaller-than-Expected DA Increase

Earlier, DA hikes were from 3 to 4% every time, but this time, it has come down to just 2 percent, which has been the lowest adjustment in a period of seven years. Usually, the government declares the DA hike majorly before the festivals such as Holi and Diwali, it was this time, however, announced after Holi.

How much will employees and pensioners receive extra?

With the 2% increase, the DA has moved from 53% to 55%, and pensioners will see a similar rise in their Dearness Relief (DR). Let's illustrate the hike with an example.

With a basic pay of Rs 19,000 the recent 2% DA hike results in monthly increments of Rs 380 (2% of Rs 19,000) that amount to annual total of Rs 4,560. The increase of Rs 160 per month and Rs 1,920 annually for basic pensioners at Rs 8,000 will support pensioners during periods of inflation.

The government plans to follow up with the 8th Pay Commission establishment after soon revealing the panel member names. The Commission, after that, will proceed to examine the salary and pension structure of the central government employees at all levels.