Union Cabinet Approves 2% DA Hike for Central Govt Employees in 2025

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday greenlit a 2 per cent hike in Dearness Allowance (DA) for central government employees, offering a much-needed salary boost. Union Minister Ashwini Vaishnaw announced the decision, which raises the DA from 53% to 55% of basic pay, effective from January 1, 2025.

This revision under the 7th Pay Commission comes as a relief for over one crore central government employees and pensioners grappling with inflation. The DA, a cost-of-living adjustment, ensures salaries keep pace with rising prices. The latest hike follows a 3 per cent increase in July 2024, when DA rose from 50% to 53%.

The announcement, though delayed, aligns with the government’s biannual DA revision schedule, providing financial support to employees ahead of the festive season.

The DA rate is determined using the All India Consumer Price Index for Industrial Workers (AICPI-IW), managed by the Labour Bureau under the Ministry of Finance. This index tracks monthly inflation trends, serving as a benchmark for DA adjustments. The current hike is based on readings from July to December 2024.

While the Cabinet’s approval applies only to central employees, state governments often adopt similar revisions, though they may adjust independently or skip hikes.

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With the DA now at 55%, an employee with a basic pay of Rs 18,000 will see their monthly DA rise from Rs 9,540 to Rs 9,900—a Rs 360 increase. Higher earners, such as those with a basic pay of Rs 50,000, will receive an additional Rs 1,000 per month. Arrears for January to March will also be paid with the revised March salary.

This adjustment aims to maintain the purchasing power of government workers amid fluctuating economic conditions.

Union Minister Ashwini Vaishnaw stated, “The Union Cabinet, chaired by PM Narendra Modi, has approved a 2 per cent increase in Dearness Allowance, raising it from 53% to 55%, to help employees cope with inflation.” The decision reflects the government’s commitment to supporting its workforce, he added.

The hike also extends to Dearness Relief (DR) for pensioners, ensuring parity in benefits.

Unlike basic salaries, set by the Pay Commission every decade, DA is revised twice yearly—effective from January and July. The government uses AICPI-IW data to ensure these adjustments reflect real-time price changes. The next revision is slated for July 2025, with an announcement expected around October.

This 2 per cent increase marks one of the smallest hikes in recent years, following a trend of 3-4 per cent raises since 2018.

The DA hike will be implemented retrospectively from January 1, 2025, with employees receiving updated salaries and arrears in April. States are likely to review their DA policies in response, though timelines may vary. Meanwhile, attention shifts to the 8th Pay Commission, expected in 2026, which could reshape salary structures further.

For now, this modest raise offers timely relief as employees navigate rising living costs.