DA hike: Will Centre offer a festive gift for government employees?

Currently, central government employees receive DA at 50% of their basic salary, and pensioners receive DR at 50% of their basic pension.

In Short

• Centre may announce DA, DR hike after cabinet meeting
• Increase could benefit 1.15 crore employees, pensioners
• Expected 3% hike linked to AICPI, effective July 1, 2024

The central government is expected to announce a hike in the dearness allowance (DA) and dearness relief (DR) for government employees after its Cabinet meeting on Wednesday, according to media reports. The government typically revises the DA twice a year, in January and July, although official announcements are made later. While DA applies to active employees, retired pensioners receive dearness relief (DR).

The most recent adjustment in DA, a 4% increase, was announced in March 2024, effective from January 2024. Currently, central government employees receive DA at 50% of their basic salary, and pensioners receive DR at 50% of their basic pension.

Today’s Cabinet meeting, chaired by Prime Minister Narendra Modi, could see a decision on increasing the DA, although there is no official confirmation yet. If announced, the increase in DA and DR would benefit around 1.15 crore central government employees and pensioners, providing a financial boost ahead of the festive season amid rising living costs.

The Confederation of Central Government Employees and Workers has recently raised concerns with Finance Minister Nirmala Sitharaman about the delay in the DA and DR hike announcement. DA, meant to cushion the effects of inflation, is reviewed in January and July each year, but the official confirmation usually comes later. Currently, DA is set at 50%, and the expected increase could bring it to 53%, with the adjustment effective from July 1, 2024.

Many employees are eagerly awaiting the announcement, which could see a 3% increase in DA. If the hike is confirmed, it would take effect from October, with arrears for the previous three months (July to September) paid out as well.

"The DA hike will happen in the next Cabinet meeting. We are expecting an increase of at least 3%," said senior official from the Confederation of Central Government Employees and Workers, as per a media report.

The DA calculation is closely tied to the All India Consumer Price Index (AICPI), which tracks changes in retail prices over a 12-month period. Any DA hike also leads to an equivalent increase in DR, ensuring financial support for retired employees. With inflationary pressures, rising costs, and fluctuating prices globally, this DA increase would help millions of employees and pensioners manage their household budgets more effectively.