The Union Cabinet on Friday approved a 2% increase in Dearness Allowance (DA) for central government employees, benefiting over one crore employees and pensioners. The revision raises DA from 53% to 55%, providing a salary boost ahead of the anticipated 8th Pay Commission.

Union Minister Ashwini Vaishnaw announced that the hike will take effect from January 1, 2025. “The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the release of an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, representing a 2% increase over the existing 53% of Basic Pay/Pension to counter inflation,” the government stated in an official release.

This revision will benefit approximately 48.66 lakh central government employees and 66.55 lakh pensioners. The last DA revision took place on July 1, 2024, following a 4-percentage-point hike to 50% in March 2024, which was implemented from January 1, 2024.

The DA hike follows the formula established by the 7th Central Pay Commission and is intended to help employees cope with inflation. The combined financial impact of the increase in DA and DR on the exchequer is estimated at ₹6,614.04 crore per annum.

What is Dearness Allowance (DA)?

Dearness Allowance (DA) is a cost-of-living adjustment paid to government employees to offset the impact of inflation and ensure their purchasing power remains stable. While basic salaries are determined by a pay commission every 10 years, DA provides periodic adjustments to help employees manage rising costs.

Both DA (for employees) and Dearness Relief (DR) (for pensioners) are designed to protect incomes from inflation and maintain financial stability for government workers and retirees.