The government has announced a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. Union Minister Ashwini Vaishnaw confirmed the decision on Wednesday afternoon.
The increase is being called a “Dussehra gift”, as it comes just before the festive season. The new hike will be effective from July 1, 2025, and will benefit lakhs of employees and pensioners across the country.
Salary Impact of the Hike
The latest DA hike will bring noticeable changes to take-home pay. For instance, an employee with a basic salary of ₹60,000 will now receive ₹34,800 as DA, compared to ₹33,000 after the March increase.
This is the second DA increase in 2025. In March, the government had approved a 2% hike, which raised DA payouts from 53% of basic pay to 55%. Before that, in October 2024, employees got a 3% hike as well.
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DA is an allowance given to government employees and pensioners to help manage inflation and rising prices. It ensures that their purchasing power is not heavily impacted by the cost of living.
Linked to Inflation Data
The DA hike is directly linked to Consumer Price Index (CPI) data for industrial workers. This data is reviewed twice a year to calculate the allowance.
As inflation has been rising in recent months, the government was widely expected to announce another hike before the festive season. The move provides relief at a time when families face extra expenses for Dussehra and Diwali.
What’s Next for 8th Pay Commission?
While the hike gives immediate financial support, employees are also waiting for the Eighth Pay Commission. The commission was announced in January and will suggest new pay structures for government staff.
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However, the official notification detailing the members of the commission and its terms of reference has not yet been issued. Once announced, the commission will work on a fresh salary revision plan.
Expected Salary Restructure
Experts predict that a fitment factor – a multiplier applied to the base pay- will be introduced by the 8th Pay Commission. The range of the estimated factor may be 1.83 and 2.86. This would lead to a salary hike of around 13% to 34% for government staff.
After the new commission’s recommendations are implemented on January 1, 2026, the DA will be reset to zero and merged with the basic salary.
This means the effective pay increase may be smaller, but the move will still benefit employees and pensioners because pensions are calculated on both basic pay and DA.
Past Pay Commission Changes
The previous 7th Pay Commission had brought major changes in the salary structure. It reviewed nearly 200 allowances. Out of these, 52 were abolished, and several others were merged to make the system more transparent and simple.
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