DA Hike: Modi Cabinet Announces 3% Hike to Government Employees Ahead of Diwali!

The Central Government has announced a 3 percent increase in the dearness allowance (DA) for central government employees and pensioners. This raises the total DA from 38 percent to 45 percent.

Diwali celebrations started early for central government employees. They are feeling relieved and happy about this decision during the holiday season.

About 1.5 Cr Gov Employees to Benefit

About 1.15 crore central government employees and retirees will benefit from the increase in Dearness Allowance (DA) and Dearness Relief (DR). This hike offers essential financial support amid rising living costs.

DA Evaluated Twice in a Year

Normally, Central government evaluates and modifies DA twice a year, i.e., in January and July. Official announcements are issued after the decision.

The most recent DA change, a 4% increase, was declared in March that took effect in January 2024. 

Retirees receive a disability annuity (DR) equal to 50% of their base pension, while central government employees are entitled to DA equal to 50% of their base income.

What is DA?

DA is a part of the pay that is meant to offset the impact of inflation. The effective pay of government employees is periodically adjusted by a raise in DA in order to combat the increasing inflation rate and maintain their purchasing power.

How is DA Caluculated?

The most recent data from the Consumer Price Index for Industrial Workers (CPI-IW) is used to calculate the Dearness Allowance, or DA, for central government employees. The Labour Bureau, a division of the Ministry of Labour, releases this index once a month. The following formula is used to determine the DA % as per the 7th Pay Commission:

7th CPC DA% = [{AICPI-IW (12-month average; Base Year 2001=100) for the previous 12-month period – 261.42}/261.42x100]

It is important to remember that DA or DR increases are normally implemented retroactively, starting on January 1 and ending on July 1 of the current year, when they are announced. The July DA hike is traditionally announced by the national government before the holiday season begins.