Government Approves 2% DA Hike, Effective from January 2025
In a significant decision for central government employees and pensioners, the Dearness Allowance (DA) and Dearness Relief (DR) have been increased by 2%, bringing the total DA to 55%. This increase will come into effect from January 1, 2025, benefiting millions of government employees and retirees. Additionally, central employees will receive two months' arrears along with their March salary.
This DA hike will impact 48.66 lakh employees and 66.55 lakh pensioners, adding an annual financial burden of approximately ₹6,614.04 crore on the government. The decision was taken to counter the rising inflation and is in line with the recommendations of the 7th Pay Commission.
The dearness allowance stood at 53% before this increase, following a 3% hike in October 2024. However, this latest 2% increase marks the smallest DA hike in the past seven years, as previous revisions typically ranged between 3% to 4%.
During the COVID-19 pandemic, the government froze DA hikes for 18 months (from January 2020 to June 2021). Employee unions have repeatedly demanded arrears for this period, but no decision has been made yet. Traditionally, the government revises DA twice a year—for January-June (announced in March) and July-December (announced in October-November).
DA calculations are based on the All India Consumer Price Index (AICPI-IW), published by the Labour Bureau. The government analyzes six months’ data to determine the percentage increase required to compensate for inflation.
Over 1 crore central employees and pensioners are expected to benefit from this hike. However, trade unions were demanding at least a 3% increase, which was not fulfilled. With the 8th Pay Commission set to be implemented in 2026, all eyes are now on the upcoming revisions and whether the next DA hike will be more substantial.
This latest revision is a relief for employees but also highlights ongoing concerns about inflation and pending arrears. The next DA revision in July 2025 will be closely watched by government employees across the country.
