Government employees and pensioners are expected to receive a three percent increase in Dearness Allowance (DA) this month, with the hike taking retrospective effect from July 1, sources revealed Wednesday.
Govt. Employee to get 3% Hike
If approved by the Union Cabinet, this will mark the second DA increase in 2025. In March, a two percent hike was announced, raising DA from 53 percent to 55 percent of basic pay. That followed a three percent increase in October 2024, demonstrating regular adjustments to offset inflation.
Financial Impact
The proposed increase aligns with Consumer Price Index (CPI) data for industrial workers, which forms the basis for bi-annual DA revisions. Under the new calculation, an employee with a basic salary of ₹60,000 will receive ₹34,800 as DA, up from ₹33,000 after the March increase.
DA is provided to government employees as compensation for inflation, ensuring their purchasing power remains stable amid rising costs.
Eighth Pay Commission Awaited
Further salary and allowance revisions will be determined by the Eighth Pay Commission, announced in January. However, official notification regarding its members and terms of reference remains pending.
Salary increments will depend on the ‘fitment factor,’ a multiplier applied to basic pay. Experts estimate this factor could range between 1.83 and 2.86, potentially resulting in salary increases of approximately 13 to 34 percent.
DA Reset Expected
The current DA rate of 55 percent will likely be reset to zero and merged with basic pay once the commission’s recommendations are implemented from January 1, 2026. While this merger may moderate the effective increase, it remains beneficial as pensions are linked to both basic pay and DA.
Historical Context
The Seventh Pay Commission reviewed nearly 200 allowances, abolishing 52 and merging others to create a more transparent and less complex salary structure. The Eighth Pay Commission is expected to follow similar principles while addressing current economic conditions and employee welfare needs.
The bi-annual DA revision mechanism ensures government employees receive regular adjustments based on inflation data, maintaining compensation levels in line with cost-of-living changes. The Union Cabinet’s approval is awaited for the latest increase to take effect officially.
