Dearness Allowance Update: Anticipated Hike for Central Government Employees
Central government employees are eagerly awaiting the much-anticipated revision of the Dearness Allowance (DA), which is expected to be announced next month. However, the delay in the release of the All India Consumer Price Index for Industrial Workers (AICPI-IW) data has pushed back the process. If everything goes as planned, an official notification regarding the DA hike could be issued in the first week of March.
As per the latest reports from ministry officials, the AICPI-IW data for November 2024 remained at 144.5 points, with a projected increase of three points. If this projection holds, the DA/DR (Dearness Relief for pensioners) rate could rise to 56% from January 2025, provided the hike remains at 3%. This development is seen as a positive sign for government employees, who should remain hopeful instead of feeling discouraged during this waiting period.
The government is currently awaiting the release of the December 2024 Consumer Price Index (CPI-IW) data to finalize the DA revision, which is based on inflation trends. In November 2024, the inflation rate was recorded at 3.88%, significantly lower than the 4.98% observed in November 2023. This provides room for a possible DA increase of 2-3% under the 7th Pay Commission.
According to media sources, if the CPI-IW index for December 2024 shows a minor change of up to 0.5 points, the DA will reach 56%. However, if the index falls by 0.6 points or more, the DA would be adjusted to 55% instead. The central government revises DA for employees and DR for pensioners twice a year, with adjustments occurring in two cycles: January to June and July to December.
In October 2024, the government approved a 3% increase in DA for employees and pensioners for the July-December period, bringing the cumulative DA to 53%. Typically, DA arrears are paid two months after approval, often leading to delayed disbursements in salaries for March or September beneficiaries. Nevertheless, this adjustment provides a financial cushion for government employees.
A crucial question remains: how will the DA increase impact salaries? For instance, an employee with a basic salary of Rs 18,000 would see an increment of Rs 540 if the DA rises by 3% in January 2025.
With the final numbers dependent on the forthcoming CPI-IW data, all eyes are on the government’s next move. The upcoming announcement is expected to bring financial relief to many central government employees and pensioners.