7th Pay Commission News: The next dearness allowance (DA) revision for central government employees is due this month. However, the announcement will probably be made in the first week of March, as witnessed on several occasions in the past due to a lag in the release of the All-India Consumer Price Index for Industrial Workers (AICPI-IW) data.
The Labour Ministry has released the AICPI data for November 2024. The All-India CPI-IW data for the month remained unchanged at 144.5 points, indicating a 3% hike in the DA. This suggests that the adjustment would raise the DA/DR rate to 56%, effective from January 2025.
With November CPI-IW remaining steady, the government will await the December figures before finalising the DA hike. With year-on-year inflation easing to 3.88% in November 2024, down from 4.98% in November 2023, the data suggests a likely hike of 2% or 3%, as per trends under the 7th Pay Commission.
The stationary CPI-IW index in November leads to two possible scenarios for the DA revision. If the index for December 2024 decreases by 0.6 points or more, the DA rate could drop to 55%. On the other hand, if the index changes by up to 0.5 points in either direction, the expected DA rate will hold steady at 56%.
The centre revises the dearness allowance of central government employees and the dearness relief (DR) of pensioners twice a year – for the January-June and July-December cycles. Since the AICPI data for the last months, such as June and December (before the DA becomes due), comes with a lag, the government usually announces hikes after the final calculation for the six-month AICPI data is available. For example, so far, the data is available for July-November 2024. To calculate the DA hike for the January-June 2025 cycle, the numbers for July-December are required.
Employees and pensioners likely to get two-month DA arrears in March
Past trends suggest that DA hikes get announced for both six-month cycles with a two-month lag, and employees and pensioners receive arrears of two months when they get their salary or pension for the months of March and September or October every year.
When was the last DA hike announced, and how much?
The Centre announced the DA hike for the July-December period in October this year. The January 2024 hike was announced in March. The Centre increased the dearness allowance by 4%, raising it to 50% of the basic pay on March 6 this year. This was followed by another 3% hike in October, bringing the final tally to 53%.
How much DA hike central govt employees can expect in next revision in 2025?
If the DA for January 2025 is increased by 3% by the central government, the minimum salary will rise by Rs 540, as the current minimum basic pay for central staff is Rs 18,000. Similarly, for pensioners, the hike will be Rs 270, as the minimum pension currently stands at Rs 9,000 for central government pensioners.
The maximum salary of serving employees stands at Rs 2,50,000 and the maximum pension at Rs 1,25,000. For them, the DA hike will be Rs 7,500 and Rs 3,750 for serving employees and pensioners, respectively, if the Centre increases DA by 3%.
Meanwhile, trade union representatives recently met Union Finance Minister Nirmala Sitharaman as part of pre-Budget customary meeting. In the meeting, employee unions urged the government to announce the 8th Pay Commission, which will provide recommendations on salary and pension revisions for central government employees and pensioners.
The 8th Pay Commission is expected to be implemented from January 1, 2026, as claimed by employee unions based on past trends, wherein the government usually sets up a pay commission every 10 years.