DA Hike For Central Govt Employees: Announcement Likely Before Holi

The Centre is likely to announce a hike in dearness allowance (DA) for central government employees ahead of Holi, according to various media reports.

The Centre updates dearness allowance twice a year. While the first review happens in January, the second happens in July. The DA hike that is decided in January is revealed around March, to offer relief to employees before the festival of Holi. The July hike is announced near Diwali every year in October or November.  

The government is expected to announce an increase in both DA and dearness relief (DR). This upcoming DA hike is expected to benefit over 12 million central government employees and pensioners.

How Does Centre Decide DA

The DA rate is decided as per the All India Consumer Price Index for Industrial Workers (AICPI-IW) revealed by the Labour Bureau, Shimla. Thel government fixes the DA hike by assessing the AICPI-IW data from the last six months.

According to the AICPI-IW data of December 2024, the expected rise in DA is projected at 2 per cent. The final decision, however, will be decided upon approval by the Union Cabinet led by the Prime Minister. 

The DA is calculated as per this formula:

DA (%) = [(Average AICPI for the past 12 months (Base Year 2001=100) - 115.76) / 115.76] x 100

DA Hike History

In March 2024, the Centre had announced a big gift to its employees before Holi by raising DA by 4 per cent to 50 per cent. This was followed by another increase by 3 per cent in October 2024, eventually making the DA rate at 53 per cent.

How Will Central Government Employees Benefit?

Given the estimated projection of 2 per cent this time, the salaries and pensions of government employees will increase. But with different income brackets, the effective rise will differ in numerical value.

However, with the 8th Pay Commission anticipated for implementation in 2026, the question now remains whether DA will be reset and merged with basic pay.