Dearness Allowance from January 2025

 

Dearness Allowance in India from January 2025: A Quick Overview

What is Dearness Allowance?

Dearness Allowance (DA) is a cost-of-living adjustment for central government employees and pensioners in India, revised twice a year (January and July) based on the All-India Consumer Price Index for Industrial Workers (AICPI-IW). It helps offset inflation’s impact on salaries and pensions.

January 2025 DA Hike

On March 28, 2025, the Union Cabinet approved a 2% DA and Dearness Relief (DR) increase, effective January 1, 2025, raising it from 53% to 55% of basic pay or pension. This benefits 48.66 lakh employees and 66.55 lakh pensioners, with an annual cost of ₹6,614.04 crore. Arrears for January–March 2025 were paid with April salaries.

Why Only 2%?

The modest hike, the smallest since July 2018, was due to a declining AICPI-IW, which dropped to 143.2 in January 2025. The DA is calculated as:

DA% = [(Average AICPI-IW for past 12 months - 115.76) / 115.76] × 100

Impact

• Basic Salary ₹18,000: DA rises from ₹9,540 to ₹9,900 (+₹360/month).
• Basic Salary ₹45,700: DA increases from ₹24,221 to ₹25,135 (+₹914/month).
• Basic Pension ₹20,000: DR grows from ₹10,600 to ₹11,000 (+₹400/month).

What’s Next?

The July 2025 DA revision, based on January–June 2025 AICPI-IW, may be smaller (potentially 1–2%) due to the index falling to 142.8 in February. The 8th Pay Commission, starting January 2026, may reset DA calculations.

Conclusion

The 2% DA hike provides relief but disappointed some expecting more. As inflation persists, employees and pensioners await the next revision and future pay reforms. Check official sources for updates.

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