DA revision in 2025: The upcoming dearness allowance (DA) revision for central government employees is scheduled for January 2025. The government plans to wait for the final All-India Consumer Price Index (AICPIN) numbers in December before making the official announcement, which may delay the revision process, as per news report.
The Dearness Allowance (DA) is determined based on the All India Consumer Price Index (AICPI), which monitors the cost of living. The Centre revises the Dearness Allowance (DA) twice a year — once for the January-June period and again for the July-December period.
The percentage for DA is calculated by assessing the increase in AICPI over a 12-month period, concluding in June each year. While the DA is adjusted every six months, the government typically announces the revisions a few months after they take effect.
On October 16, 2024, the Union Cabinet approved a 3% increase in the Dearness Allowance (DA) for central government employees just before Diwali. This raised the DA to 53% from 50%, which helped more than a crore central government employees and pensioners. Before that, DA was increased by 4%, bringing it up to 50% of the basic pay. This was for January 2024. This update was made by the Centre on March 6 of this year ahead of Delhi.
The government typically announces hikes in Dearness Allowance (DA) after finalizing the six-month Average Consumer Price Index for Industrial Workers (AICPIN) data, as there is a lag in receiving data for months such as June and December before the DA becomes due. The December data is expected in February 2025.
How much DA hike is expected?
The increase in Dearness Allowance (DA) is determined based on the All India Consumer Price Index (AICPIN) data. As of October 2024, the AICPIN index had reached 144.5, potentially leading to a DA hike of 55.05%. Projections suggest that the AICPIN index may rise to 145.3 in November and December, resulting in a DA increase to 56% in January 2025.
If the central government decides to raise the DA for January 2025 by 3%, the minimum salary for central staff, currently at Rs 18,000, would see a boost of Rs 540. Likewise, pensioners would receive a hike of Rs 270, considering the minimum pension for central government pensioners is Rs 9,000.
The maximum salary for current employees is set at Rs 2,50,000, with a maximum pension of Rs 1,25,000. In the event that the Centre raises the Dearness Allowance (DA) by 3%, serving employees can expect a hike of Rs 7,500, while pensioners will see an increase of Rs 3,750.
8th Pay Commission
The government is facing heightened pressure from employee unions to establish the 8th Pay Commission, which will offer suggestions for salary and pension adjustments for more than one crore central government employees and retirees. However, earlier this month, the Finance Ministry stated that the Centre has no immediate plans to establish the 8th Pay Commission. Minister of State Pankaj Chaudhary clarified in a written response during a session in Rajya Sabha that the government is currently not reviewing any proposals to set up the 8th Pay Commission.
How is DA calculated?
The formula for calculating DA is as follows:
For general employees: DA Percentage = ((Average of AICPI for the past 12 months – 115.76) / 115.76) x 100
For central public sector employees: DA Percentage = ((Average of AICPI for the past 3 months – 126.33) / 126.33) x 100
It is important to note that the calculations may vary slightly depending on the sector involved.