Central government employees and pensioners would soon expect an upward revision of their Dearness Allowance (DA) and Dearness Relief (DR) in the new year. The Central government typically re-evaluates both the allowances on a semi-annual basis, especially during January and July, so as to account for inflationary factors and other rising costs.
Project DA Rise in Jan 2025
As of July to September 2024, the All-India Consumer Price Index (AICPI) has reached 141.5 points, resulting in a DA score of 54.49%. If the index continues its upward trend, potentially reaching 144-145 points by December 2024, the DA could increase by 3%, bringing it to 56% of the basic pay. This adjustment would benefit over 50 lakh central government employees and 65 lakh pensioners.
Calculation Method for DA
The DA and DR revisions are computed using the average of the AICPIN for the past 12 months, which captures the inflation rate. The formula for computation of DA is as follows:
DA (%) = [(Average of AICPI for the past 12 months – 115.76) / 115.76] × 100
This methodical approach ensures that the allowances correctly reflect the inflation rates so that employees’ purchasing power is not eroded.
Financial Effect on Employees
For the same employee, earning a basic salary of ₹18,000, by improving DA by 3%, his monthly increase would be ₹540, which will, in turn, lead to a marked increase in their monthly remuneration and thus have a positive effect on the rising cost of living.
Implementation Timeline
It is expected that the DA increase will be from the date of January 1, 2025. Official declaration would be likely to come in the session on the Union Budget. Employees and pensioners will get the arrears for January and February along with their March salaries.
Conclusion
This forthcoming raise in Dearness Allowance is an expression of concern by the government toward its staff and pensioners amidst rising pressures of inflation. Through synchronizing the DA with all the prevailing economic parameters, the government would make certain that real income from employment remains intact and the improvement in financial well-being from employment gets enhanced.
