DA Hiked! Government Approves Dearness Allowance For Its Employees Ahead Of 8th Pay Commission

After this revision, the DA will rise to 53 per cent to 55 per cent. DA is provided to government employees to compensate for the effect of inflation or a hike in prices of goods and services

Outlook Money

Updated on: 28 March 2025 6:26 pm

DA Hiked Photo: Shutterstock

There is some good news for central government employees before the 8th pay commission. The Union Cabinet has approved a two per cent increase in dearness allowance (DA). The cabinet has also approved a two per cent increase in Dearness Relief (DR) to pensioners. Both will be in effect from January 1, 2025.

After this revision, the DA will rise to 53 per cent to 55 per cent. DA is provided to government employees to compensate for the effect of inflation or a hike in prices of goods and services. In October last year, the DA was increased to 53 per cent of basic pay.

It is important to note that a salary increase for central government employees ahead of the 8th Pay Commission was approved by the centre in January this year, revising the wages and allowances of central government employees.

The DA and DR will continue to be revised twice a year, this is most likely the final revision before the formal commission begins discussion with various stakeholders. The constitution, which involves a chairman and a minimum of two members, is expected to be appointed soon.

Under the 5th Pay Commission, the rule was to merge the basic pay with DA. This would happen once the key allowance crossed 50 per cent. However, the practice was discontinued under the 6th and 7th pay commissions, which had a more flexible approach to the wage structure.

There have been speculations regarding whether DA or DR will be automatically merged into basic pay as it has now crossed the 50 per cent mark. In the past, a similar merger took place when the DA crossed the 50 per cent threshold. However, it has been clarified that the DA will be a separate component of the remuneration and will not be included in the ambit of pay.

The DA system was made formal in 1972, following the recommendation of the 3rd Pay Commission. The DA was linked to the cost-of-living index, and periodic revisions were incorporated. The DA was initially five per cent of basic pay.

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