The Union Cabinet might make a final decision over the Dearness Allowance (DA) hike this week. If accepted, the new DA will take effect retroactively starting in January 2025, giving the employees a pay raise for March along with two months' worth of arrears.
According to recent news reports, a 2% increase in Dearness Allowance (DA), rather than the 3% or 4% they have received in prior years, may disappoint central government employees and retirees. According to the All India Consumer Price Index (AICPI), the DA increase is expected to be the lowest in the last seven years, as reported by the Financial Express.
8th Pay Commission: Lowest DA Hike in 7 Years
With the impending 2% DA rise, it will be the lowest hike in almost 78 months, since July 2018. The previous lowest hike, which took place between July and December 2018, was likewise 2%.
The government updates the Dearness Allowance (DA) and Dearness Relief (DR) twice a year, in January and July. The most recent increase in DA was from 50% to 53% in July 2024. The cabinet had previously agreed on a raise from 46% to 50% in March 2024, which was formally announced on March 25, 2024.
The government also increased DA and DR by 3% on October 16, 2024, under the 7th Pay Commission, bringing both to 53% with effect from July 1, 2024. This consistent pattern of changes will be followed in the upcoming DA and DR announcements.
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Recent DA Hike History
- July 2024: DA increased from 50% to 53%.
- March 2024: Government approved a hike from 46% to 50%, announced on March 25, 2024.
- October 2024: DA and DR increased by 3%, reaching 53% under the 7th Pay Commission, effective from July 1, 2024.
8th Pay Commission Announcement
The government has already announced the 8th Pay Commission on January 16, 2025, and its recommendations will take effect from January 1, 2026. This implies that the 7th Pay Commission will only implement one more Dearness Allowance (DA) hike, most likely around Diwali this year.
It should be noted that the new Pay Commission's proposals usually take time to execute. It is anticipated that the 8th Pay Commission will take approximately a year to submit its report, maybe until March 2026. Because of this, there may be one final DA hike for January- June 2026 under the old system. Once the new Pay Commission’s recommendations are applied, the DA will be merged with the basic salary, resetting it to zero.
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