Government Approves 3% Dearness Allowance Hike as Dussehra Gift for Employees and Pensioners

In a festive gift to over 48 lakh central government employees and 67 lakh pensioners, the Union Government on Wednesday approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR), effective July 1, 2025.

The announcement was made by Union Minister Ashwini Vaishnaw, who confirmed the hike as a Dussehra and Diwali gift, aimed at helping employees and retirees offset inflation pressures.

What Does the DA Hike Mean for Employees?

With the latest increase, the DA goes up from 55% to 58% of basic salary. Here’s how it impacts pay:

For an employee with a basic salary of ₹60,000:
- Previous DA (55%) = ₹33,000
- New DA (58%) = ₹34,800
- Net increase = ₹1,800/month or ₹21,600 annually

Second DA Hike in 2025

This is the second DA revision this year:

March 2025: 2% hike (from 53% to 55%)
October 2025: 3% hike (from 55% to 58%)

The biannual DA revision is based on the Consumer Price Index (CPI) for industrial workers, which reflects inflation trends.

Impact on Pensioners

The Dearness Relief (DR) for pensioners also increases by 3%. Since pensions are linked to basic pay and DA, this hike directly improves pension payouts, especially important during the festive season.

What’s Next? 8th Pay Commission Coming

The next big salary reform will come via the 8th Pay Commission, which was announced in January 2025. Though the Terms of Reference (ToR) and member details are still awaited, it’s expected to bring significant changes, including:

Fitment factor between 1.83 to 2.86, potentially increasing salaries by 13–34%
Merger of DA with basic pay, resetting DA to 0% from Jan 1, 2026
Simplification of allowances, similar to 7th Pay Commission’s reforms