Central government employees may get DA hike ahead of Holi
What's the story
The Indian government is planning a dearness allowance (DA) and dearness relief (DR) increase, which could benefit over 12 million central government employees and pensioners.
According to multiple media reports, an official announcement for the hike is expected before the Holi festival.
The government revises DA twice annually—in January and July. The January revision is usually announced around Holi to provide financial relief before the festival.
Inflation protection
DA revision shields employees from inflation
The government's DA revisions are intended to shield employees and pensioners from the impact of inflation on their purchasing power.
Based on December 2024 data, a 2% hike in DA is likely, which could increase both DA and DR to 55%.
However, this final decision will be subject to the approval of the Union Cabinet headed by Prime Minister Narendra Modi.
DA calculation
How is DA calculated?
The formula to calculate the DA rate is dependent on the All India Consumer Price Index for Industrial Workers (AICPI-IW), compiled by Labor Bureau in Shimla.
For central government employees, the formula is: DA (%) = [(Average AICPI for the last 12 months (Base Year 2001=100) - 115.76) / 115.76] x 100.
Public sector employees use a different formula: DA (%) = [(Average AICPI for the last three months (Base Year 2016=100) - 126.33) /126.33] x 100.
Hike history
Recent DA hikes and future expectations
On March 7, 2024, the Cabinet raised the DA to 50% of basic pay from 46%, just before Holi on March 25.
Then on October 16, another hike was approved—this time by 3%. This took both DA and DR to 53%, effective from July 1, under the seventh Pay Commission.
With the eighth Pay Commission due in 2026, many are wondering whether DA be merged into basic pay.