DA hike for government employees: What is dearness allowance, how is it calculated | All you need to know
The Union Cabinet has approved a 3% increase in dearness allowance for central government employees, benefiting 49.19 lakh employees and 68.72 lakh pensioners. The adjustment aims to offset inflation and maintain purchasing power, affecting salaries of government employees.
DA hike for government employees: The Union Cabinet on Wednesday approved a 3% increase in the dearness allowance for central government employees ahead of Diwali, a decision that will impact nearly 49.19 lakh employees and 68.72 lakh pensioners.
DA hike for government employees: What is dearness allowance?
Dearness allowance is a cost-of-living adjustment included in a government employee's salary. It aims to offset inflation and maintain purchasing power. The rates are usually reviewed and updated twice a year, typically around Diwali in October and Holi in March.
DA hike for government employees: How is it calculated?
Dearness allowance is calculated based on the Consumer Price Index (CPI). For example, if the basic salary is Rs18,000 and the dearness allowance rate is 50%, then the DA amount will be 50% of Rs18,000, which is Rs9,000. This ₹9,000 is added to the basic salary, increasing the total pay to help compensate for rising living expenses, according to a report by Ambit Institutional Securities.
DA hike for government employees: What part of the salary is DA?
The salaries for government employees include basic pay, dearness allowance, house rent allowance (HRA), transport allowance (TA), other allowances and pension. Over time, the proportion of basic pay in total salaries has decreased from 65% to about 50%, while allowances have increased. Employees' basic salary makes up 51.5% of their total income. DA accounts for approximately 30.9%, HRA for about 15.4%, and travel allowance for roughly 2.2%, the report said.
DA hike for government employees: Govt's Diwali DA announcement
The Cabinet said in a statement issued on Wednesday said,“The Union Cabinet chaired by the Prime Minister Shri Narendra Modi today has approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners w.e.f 01.07.2025 representing an increase of 3% over the existing rate of 55% of the Basic Pay/Pension, to compensate against price rise."
Note: This story was originally published on October 1. It has been updated today, December 29
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