7th Pay Commission: The central government may soon announce an increase in dearness allowance (DA) and dearness relief (DR). This decision of the government will benefit more than 1.2 crore government employees and pensioners. According to media reports, the government may make a formal announcement before Holi
7th Pay Commission: The central government may soon announce an increase in dearness allowance (DA) and dearness relief (DR). This decision of the government will benefit more than 1.2 crore government employees and pensioners. According to media reports, the government may make a formal announcement before Holi. The government revises DA every year in January and July, although its official announcement is made after some time. Usually the increase in January is announced before Holi, while the increase in July is done around Diwali. The government gives this allowance to maintain the purchasing power of the employees from the effect of inflation.
How much will be the increase this time?
As per the data of December 2024, the government can increase it by 3%, which can take DA and DR to 56%. However, the final decision will depend on the approval of the Union Cabinet headed by the Prime Minister.
How is DA decided?
Dearness Allowance is calculated on the basis of All India Consumer Price Index for Industrial Workers (AICPI-IW).
DA formula for central employees
DA (%) = [(Average AICPI of last 12 months – 115.76) / 115.76] × 100
DA formula for public sector employees
DA (%) = [(Average AICPI of last 3 months – 126.33) / 126.33] × 100
A look at previous DA hikes
March 2024: The government had increased DA from 46% to 50%. The announcement was made on March 7, 2024, giving relief to employees ahead of Holi.
October 2024: The government increased DA by another 3%, taking it to 53%. This revision came into effect from July 1, 2024.
8th Pay Commission and future DA hike
At present, the recommendations of the 8th Pay Commission are likely to be implemented in 2026. During this time it will be seen whether DA will be merged into the basic salary or not. The recommendations of the 8th Pay Commission can be finalized by the end of the financial year 2025-26 and it will be implemented next year. Earlier, under the 7th Pay Commission, two DA hikes are expected in 2025 and one in 2026.
