Centre raises Dearness Allowance by 2% for government employees, pensioners

The Union Cabinet, chaired by Prime Minister Narendra Modi, on March 28 approved a 2 percent increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners. The revision, effective from January 1, 2025, will raise the existing DA/DR rate from 53 percent to 55 percent of the basic pay /pension.

"The combined impact on the exchequer due to both Dearness Allowance and Dearness Relief would be Rs 6,614.04 crore per annum," the government stated in a release. The move is set to benefit approximately 48.66 lakh Central Government employees and 66.55 lakh pensioners.

The increase follows the established formula recommended by the 7th Central Pay Commission, which is designed to mitigate the impact of inflation on government employees and retirees. This will benefit around 1.15 crore people, ensuring that their purchasing power remains stable despite rising inflationary pressures, the statement noted.

The DA and DR revisions are in line with periodic adjustments made by the government to compensate for fluctuations in the cost of living. The government revises these rates twice a year, usually in January and July, based on changes in the All India Consumer Price Index (AICPI) and other economic factors.