GOOD News! Union Cabinet Approves 2% DA Hike For Central Government Employees: Report

New Delhi: The Union Cabinet on Friday approved a two per cent hike in Dearness Allowance (DA) for central government employees, reported ET Now citing sources. However, there is no official confirmation in this regard yet.

With this revision, the DA will be increased from 53 per cent to 55 per cent. It will provide a salary hike for central government employees ahead of the eight pay commissions. The DA was last increased in July 2024 from 50 per cent to 53 per cent.

Notably, the government often revises DA twice a year - in January and July. The announcement for the January revision is generally made around Holi and the announcement regarding the July revision is made around Diwali.

What IS DA?

The Dearness Allowance/Dearness Relief is paid to central government employees/pensioners to adjust the cost of living and to protect their basic pay/pension from erosion in the real values to counter inflation.

How Is DA Calculated?

The DA rate is calculated using the All India Consumer Price Index for Industrial Workers (AICPI-IW). The data is compiled by the Labor Bureau in Shimla. The calculation formulas are:

- DA (per cent) = [(Average AICPI for the past 12 months (Base Year 2001=100) - 115.76) / 115.76] × 100

- DA (per cent) = [(Average AICPI for the past 3 months (Base Year 2016=100) - 126.33) / 126.33] × 100.

The 8th pay commission is expected to be implemented in 2026. reports are surfacing that the 8th pay commission may reset and merge DA into the basic pay. However, the recommendations are yet to be finalised.