The central government is expected to announce a hike in dearness allowance (DA) and dearness relief (DR) before Holi, benefiting over 12 million employees and pensioners. According to reports, the official announcement is anticipated in the coming days.
The government revises DA twice a year, in January and July, but official announcements usually follow later. The January revision is often declared around Holi, while the July revision is announced before Diwali. The purpose of DA and DR adjustments is to offset inflation and protect the purchasing power of employees and pensioners.
Based on December 2024 data, a 2per cent hike is likely, increasing DA and DR to 55per cent. However, the final approval rests with the Union Cabinet, led by the Prime Minister.
The DA rate is determined using the All India Consumer Price Index for Industrial Workers (AICPI-IW), compiled by the Labor Bureau in Shimla. The calculation formulas are:
DA (per cent) = [(Average AICPI for the past 12 months (Base Year 2001=100) – 115.76) / 115.76] × 100
DA (per cent) = [(Average AICPI for the past 3 months (Base Year 2016=100) – 126.33) / 126.33] × 100
In March 2024, the government raised DA to 50per cent from 46per cent, just before Holi. Later, in October 2024, another 3per cent hike took DA and DR to 53per cent, effective from July 1, 2024.
The 8th Pay Commission, set for implementation in 2026, may reset and merge DA into the basic pay. Its recommendations are expected to be finalized by the end of the current financial year. Before this transition, three more DA hikes are expected under the 7th Pay Commission—two in 2025 and one in 2026.
