Dearness Allowance (DA) Set for Increase in 2025
Good news for central employees and pensioners! As expected, the dearness allowance (DA) and dearness relief (DR) for central government employees and pensioners will see an increase in 2025. This revision, which happens twice a year, will take place around the time of Holi, with the hike expected to be around 3-4%. This will bring the current DA rate of 53% to approximately 56% or even 57%, benefiting millions across the country. The DA increase will be implemented under the 7th Pay Commission.
How Is DA Calculated?
The government revises DA and DR twice annually, based on the All India Consumer Price Index (AICPI). The rate of increase is calculated using the average CPI for industrial workers over the last 12 months. The calculation for the new DA is done every January and July, with the announcement typically coming in February or March.
For instance, last year (2024), DA was increased by 7%, split between a 4% increase in January and 3% in July.
What to Expect for DA in 2025?
As of now, central employees and pensioners are receiving a 53% DA rate, which was last updated in July 2024. However, with the latest data for July-November 2024 showing the AICPI index reaching 144.5, it is anticipated that DA will rise by 3-4%, reaching around 56% by the time of the announcement. The final numbers will depend on the December 2024 AICPI data, which is still awaited.
Impact on Employees and Pensioners
This DA hike will benefit around 48 lakh central employees and 69 lakh pensioners. The increase in DA is expected to boost both salaries and pensions significantly.
How Will the Salary and Pension Increase?
The increase in DA is calculated based on the average of the AICPI index over the last 12 months. For central government employees, the formula to calculate DA is:
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100
For public sector employees, the formula is:
DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100
Example: How Much Will Employees and Pensioners Get?
- For Employees:
- Employees with a minimum salary of Rs 18,000 will see an increase of Rs 540 with a 3% DA hike.
- Employees with a maximum salary of Rs 2,50,000 will receive an additional Rs 7,500.
- For Pensioners:
Pensioners will also benefit from the DA increase, with pension amounts rising between Rs 270 and Rs 3,750, depending on the individual’s pension amount.
This DA revision is a welcomed financial relief for central employees and pensioners, ensuring their income keeps pace with inflation and cost-of-living adjustments.
