7th Pay Commission News: The dearness allowance revision announcement for central government employees is due next month. The hike, however, in dearness allowance and dearness relief will be implemented retrospectively from January.

DA and DR are revised twice a year (January and July) by the Centre for the employees currently serving across central government departments and pensioners. The salary revision is based on the All India Consumer Price Index for Industrial Workers (AICPIN-IW), which measures inflation.

How many times DA is revised in a year for central government employees?

The DA and DR get revised 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 hikes are announced after the final calculation for the six-month AICPI data is available.

For example, the December month’s data has recently been released. So now the data is available for July-December 2024, which is necessary for calculations of DA revision for January 2025.

The All-India CPI-IW for December 2024 fell by 0.8 points to 143.7, according to the Labour Bureau. This month’s CPI-IW indicates a 2% increase in DA for central government employees, effective January 2025, bringing it to 55.98% under the 7th CPC.

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The DA/DR rate is calculated by taking the absolute value of the DA rate, leaving out the decimal value. All speculations regarding future DA/DR have been resolved with this announcement. Consequently, the 55% DA/DR from January 2025 is now confirmed and is expected to be approved by the Union Cabinet next month, i.e., March 2025.

Earlier, it was expected that the Centre might give at least a 3% hike in DA and DR for employees and pensioners. However, with a fall in AICPI-IW numbers, the government is likely to announce a just 2% hike in dearness allowance for the January to June 2025 cycle.

How is DA/DR hike calculated?

The DA/DR percentage is determined using the average CPI-IW of the last 12 months. Based on the data provided:

The DA from July 2024 was 53.65%. As CPI-IW fluctuated over the months, the DA/DR percentage gradually increased. The final calculation for January 2025 places DA at 55.98% under the 7th Pay Commission formula.

Why is the DA hike 2%?

In December 2024, the CPI-IW dropped slightly by 0.8 points, but the overall 12-month average CPI increased compared to the previous period. This led to a net increase of 2% in DA/DR, confirming the new rate at 55.98%.

However, as per government rules, the decimal value is ignored, making the final DA/DR effective from January 2025 at 55%.

When will DA hike be announced?

The Union Cabinet will approve and announce the DA/DR hike possibly in March 2025. As past trends suggest the government usually announce the January DA hike around the first week of March.

When was the last DA hike announced, and how much?

The Centre announced the DA hike for the July-December period in October last year. The January 2024 hike was announced in March that year. 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%.

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How much change in salary central govt employees can expect with a 2% DA hike?

If the DA for January 2025 is increased by 2%, the minimum salary will go up by Rs 360, considering the current minimum basic pay at Rs 18,000. Similarly, for pensioners, the hike will be Rs 180, as the minimum pension currently stands at Rs 9,000 for 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 5,000 and Rs 2,500 for serving employees and pensioners, respectively, if the Centre increases DA by 3%.