Potential Increase in Dearness Allowance for Government Employees

The central government of India is anticipated to announce an increase in the Dearness Allowance (DA) and Dearness Relief (DR) for its employees and pensioners following a cabinet meeting scheduled for today. Over a hundred million people including central government employees and pensioners have their attention focused on this declaration, which may come as a pre-Diwali gift from the government.

Recently, the Confederation of Central Government Employees and Workers expressed concerns over the delay in announcing the DA/DR hike through a letter addressed to Finance Minister Nirmala Sitharaman. DA is typically reviewed twice a year, in January and July, based on inflation rates, although official announcements often occur at a later date. Currently, the DA stands at 50%.

Government employees are hopeful for a 3% increase in the DA, which would see it rise to 53%. Pensioners are also expecting a similar adjustment in their relief. However, no official statement has been released as of now. This anticipated increase is expected to take effect in October and will include arrears for the previous three months from July to September.

A senior official from the Confederation of Central Government Employees and Workers indicated in a media report that a DA increase of at least 3% is expected during the next cabinet meeting. The calculation of DA is closely linked to the All India Consumer Price Index (AICPI), which tracks retail inflation over the past 12 months. In the face of global inflation pressures and rising costs, this decision is significant for managing household budgets across the country.

In March 2024, there was a 4% hike in the DA, raising it from 46% to 50%. This adjustment also prompted revisions in other allowances like house rent allowance, in line with the recommendations of the 7th Pay Commission. Although it proposed automatic revisions for surpassing 50% DA, approvals have not yet been received, which is expected to be a topic of demand with the upcoming 8th Pay Commission.