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The Union Cabinet has approved a 2% increase in Dearness Allowance (DA) for central government employees, raising it from 53% to 55%
7th Pay Commission DA Hike News Today: For 2% Raise In Dearness Allowance How Much Salary Increment Will Central Govt Employees Get?
7th Pay Commission: In a bonanza for the central government employees, the Union Cabinet, headed by Prime Minister Narendra Modi, on Friday approved a 2 per cent DA hike. The announcement was made by Union Minister Ashwini Vaishnaw. With this, central government employees’ dearness allowance (DA) has increased to 55 per cent of the basic pay, from the current 53 per cent.
The hike is applicable from January 1, 2025, and will benefit more than one crore employees and pensioners. It should be noted that the April salaries will carry the raised DA along with arrears for the previous three months (January-March 2025), as the announcement was delayed.
7th Pay Commission DA Hike: How Much Will Salary Increase?
On a 2% DA hike, the salary of the entry-level central government employee, who has a basic salary of around Rs 18,000 per month, will increase in the range of Rs 360 per month, effective from January 1, 2025.
If somebody’s salary is Rs 30,000 per month and has Rs 18,000 as the basic pay, he or she now gets Rs 9,540 as dearness allowance, which is 53 per cent of the basic pay. However, after the expected 2 per cent hike, the employee will get Rs 9,900 per month, which is Rs 360 higher.
However, in case of 3 per cent DA hike, the employee will get a increase of Rs 540 in dearness allowance to Rs 10,080 per month.
7th Pay Commission: The Previous DA Hike
In the previous DA hike in October 2024, the central government employees received a DA hike of 3 per cent, with effect from July 1, 2024. After the hike, the DA had increased from 50 per cent to 53 per cent of the basic pay. Pensioners also received the same hike in dearness relief.
The DA hike, which is announced twice a year (with effect from January and July), raises the take-home salaries of the central government employees as per the inflation rate.
DA is given to government employees, while DR is given to pensioners.
How Is DA Hike Calculated?
The DA and DR hike is decided based on the percentage increase in 12 monthly average of the All India Consumer Price Index (AICPI) for the period ending June 2022. Though the central government revises the allowances on January 1 and July 1 every year, the decision is generally announced in March and September.
In 2006, the central government had revised the formula to calculate the DA and DR for central government employees and pensioners.
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months -115.76)/115.76)x100.
For Central public sector employees: Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months -126.33)/126.33)x100.
8th Pay Commission: What’s The Status, Expected Pay Hike?
Financial services company Goldman Sachs in its note on March 24 said the 8th Pay Commission is expected to be constituted in April and its report is likely to be implemented in 2026 or 2027.
It also said central government employees are likely to receive a hike of Rs 14,000-19,000 per month in their median salary after the implementation of the 8th Pay Commission in 2026 or 2027. This is a 14-19% hike over their current median monthly salary (pre-tax) of Rs 1 lakh.
