Cabinet approves 2% Dearness Allowance hike for central government employees based on 7th Pay Commission recommendation

NEW DELHI: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday approved the release of an additional installment of Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners. Effective from January 1, 2025, this revision increases the DA and DR by 2 per cent, raising the current rate from 53 per cent to 55 per cent of the basic pay and pension.
This decision is aimed at offsetting the impact of inflation and providing financial relief to government employees and retirees. The increase is in line with the 7th Central Pay Commission's recommendations and follows the established formula for DA and DR revisions.
The approved hike will benefit approximately 48.66 lakh central government employees and 66.55 lakh pensioners. The total financial impact of the DA and DR increase on the exchequer is estimated to be Rs 6,614.04 crore per annum.
The revised DA and DR will be included in the upcoming salary and pension disbursements, with arrears payable from January 1, 2025.
The government periodically revises DA and DR rates based on inflationary trends and price indices to maintain the real value of earnings for its employees and pensioners.