Even before the new financial year begins, the Modi government has made an important decision for government employees.
On Friday, the central government announced a 2% increase in Dearness Allowance (DA).
This raises DA from 53% to 55%, leading to a salary increase for lakhs of employees.
What is Dearness Allowance (DA) and Why is it Given?
Dearness Allowance (DA) is an extra payment given to government employees to help them manage rising prices due to inflation.
While the basic salary is set by the Pay Commission every 10 years, DA is revised every 6 months to adjust for inflation.
The last revision was in July 2024, when DA increased from 50% to 53%. With this latest hike, it has now gone up to 55%.
How is DA Increased and Who Benefits?
The government updates DA twice a year, in January and July. Although the official announcement may sometimes be delayed, the calculation is based on the AICPI-IW index, which tracks inflation trends.
This DA hike applies only to central government employees, but state governments often follow the decision later. However, states can set their own DA rates and timings.
What is the AICPI-IW Index?
The All India Consumer Price Index for Industrial Workers (AICPI-IW) is an official measure of inflation.
The Labor Bureau under the Ministry of Labor publishes this index, which helps determine DA adjustments.
How Much Will Salaries Increase?
Here’s an example:
If an employee’s basic salary is ₹50,000, their DA at 53% was ₹26,500.
After the 2% hike, DA at 55% will now be ₹27,500.
This results in a salary increase of ₹1,000 per month.
This DA hike will provide financial relief to employees, helping them manage the rising cost of living.
