The figures fell by 0.5 points to 143.2 in January. This is the second consecutive month-on-month decline. The AICPI-IW decreased by 0.8 points to 143.7 in December 2024 from 144 in November 2024. It is worth noting that the hike in dearness allowance (DA) is calculated based on the average All India Consumer Price Index (AICPI-IW) for industrial workers, which measures fluctuations in the cost of living. Let us know how DA is calculated:

For Central Government employees- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] X 100

For Public Sector Employees- DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] X 100

Notably, if the cost of living increases, the government provides more DA/DR hike to government employees and pensioners.

7th Pay Commission DA Hike: More Details

The government is expected to announce a hike in Dearness Allowance (DA) and Dearness Relief (DR) soon. Apart from this, 1.2 crore central government employees and pensioners are now eagerly waiting for the announcement of DA/DR hike.

DA/DR is increased twice a year, the first hike comes into effect from January 1 and the second hike from July 1. It is worth noting that central government employees and pensioners are paid under the 7th Pay Commission. Currently, central government employees get Rs 18,000 as minimum basic salary. At the same time, central government pensioners get Rs 9,000 as minimum basic pension.

Rupak Sarkar, President of the Confederation of Central Government Employees and Workers, recently told NDTV Profit, "According to our calculations, the increase in dearness allowance will probably be 2%." According to a report by Financial Express, this will be the lowest DA hike in the last 7 years.

Salary Hike

If a person's current minimum basic salary is Rs 18,000 and the DA is increased by 2% for January 2025, his minimum salary will increase by Rs 360. Further, under the current 53% DA, he is entitled to a salary (minimum basic salary + DA) of Rs 27,540. However, if the DA is increased to 55%, he will be paid Rs 27,900.

If a person's current minimum basic pension is Rs 9,000 and the DR is increased by 2% for January 2025, his minimum pension will increase by Rs 180. Under the current 53% DR, he is entitled to a pension (minimum basic salary + DR) of Rs 13,770. However, if the DA is increased to 55%, he will be paid Rs 13,950.