The government has increased its precious allowance (DA) by 2%, from 53% to 55%. This increase also applies to the respect of pensioners (DR). The decision was made by the coalition cabinet led by Prime Minister Narendra Modi on March 28, 2025. The hike will take effect from 1 January 2025 and it will affect approximately 1.115 billion people, including 4.866 million employees and pensioners of Rs 6.655 million. As the decision was delayed, employees will receive three months of owed payments (January 2025 to March 2025) on their April salary.
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Highlights of hiking
|
aspect |
detail |
|
Previous DA rate |
53% |
|
Revised DA rate |
55% |
|
from |
January 1, 2025 |
|
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2% |
|
Financial impact |
Rs 66,144 crore per year |
|
Beneficiary |
48.66 billion employees and 665,500 pensioners |
|
Previous hikes |
July 2024 (from 50% to 53%) |
What is Dear Allowance (DA)?
Dear Allowance (DA) is an additional payment provided to government employees and pensioners to help them manage the increased cost of living. It is revised twice a year (January and July). It is calculated as a percentage of the base salary. It is provided for government employees and workers in the public sector, respectively, taxable and must be announced in the income tax return.
How will employee salaries affect?
A 2% increase means employees will see their monthly payments increase directly.
- Example: If the employee’s base salary is €1,00,000, then 55% of the new DA is Rs 55,000 (Rs 53,000 from before).
- For multitasking staff (MTS), the base salary is Rs 18,000:
- Current DA (53%) = ₹9,540
- New DA (55%) =
- Salary increase = Rs 360 per month
Why is DA important to employees?
DA will help employees offset inflation monthly. It will ensure that employees can buy as much as possible from their salaries. Revised based on changes in the Consumer Price Index (CPI).
The lowest DA hike in recent years
In the past, the government usually announced DA hiking ahead of festivals such as Holi and Diwali. However, this time, the January-June cycle is becoming increasingly delayed. Similarly, 2% growth was the lowest in the past 7 years. Earlier, the government increased by 3% to 4% each time, but this time, the rate hike was smaller.
The first big interest rate hike after the 8th Remuneration Committee announcement
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This is the first hike since the government announced the establishment of the 8th salary committee on January 16, 2025. The Committee’s recommendations will come into effect on January 1, 2026.
|
Wage Committee |
An effective year |
Current status |
|
Seventh Salary Committee |
2016 |
The final stage of 2025 |
|
8th Salary Committee |
2026 |
Waiting for suggestions |
The next DA hike from July to December 2025 is expected to be in October 2025. After the implementation of the 8th salary committee, the DA will merge into the base salary, resetting it to zero.
This increase in DA provides some relief for inflation for government employees and retirees, and the upcoming 8th Payroll Commission recommendation is expected to bring further salary revisions.
Source: https://dinhtienhoang.edu.vn
Category: Optical Illusion