Cabinet approves 2% hike in dearness allowance of central govt employees

Cabinet approves 2% hike in dearness allowance of central govt employees

The Union Cabinet on Friday approved a 2 per cent hike in the Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners, with effect from April 1, 2025.

“The Union approved the release of an additional instalment of DA to central government employees and Dearness Relief (DR) to pensioners with effect from January 1, 2025, representing an increase of 2 per cent over the existing rate of 53 per cent of the basic pay/pension, to compensate against price rise,” a press statement said.

The combined impact on the exchequer on account of the increase in both Dearness Allowance and Dearness Relief would be Rs 6,614.04 crore per annum. The increase would benefit about 48.66 lakh central government employees and 66.55 lakh pensioners.

“This increase is in accordance with the accepted formula, which is based on the recommendations of the Seventh Central Pay Commission,” a press statement issued by the government said.

Dearness Allowance and Dearness Relief are paid to central government employees and pensioners to adjust the cost of living and to protect their basic pay or pension from erosion in real value.

They are revised twice a year from January 1 and July 1 based on the increase in the 12-month average of the All-India Consumer Price Index for Industrial Workers (AICPI-IW) published by the Labour Bureau.

A 3 per cent hike in the Dearness Allowance was announced in October 2024, with effect from July 1, 2024.