The 2 percent DA hike for Jan-June was nothing short of dismal for government employees, marking the lowest DA hike in last 7 years.
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The central government had in March announced a 2 percent increase in Dearness Allowance and Dearness Relief for central employees and pensioners. The latest increase in DA came into effect retrospectively from January 2025. Central government employees were given the hiked salary for the month of March along with arrears for the month of January and February.
The 2 percent DA hike was nothing short of dismal for government employees. The 2 percent increase in DA marked the lowest DA hike since July 2018. The last DA hike was announced in October 2024. The Union Cabinet approved a 3 percent DA increase for central government employees. A dearness allowance of 53 percent of basic pay is being provided to central government employees as opposed to the previous 50 percent.
The latest DA hike for the January to June 2025 cycle increased the key allowance to 55 percent. This is the lowest in 78 months.
The central government employees and pensioners are waiting for the next DA hike update for the July to December 2025 period. The revision is expected to be announced around October or November.
Dearness Allowance hikes are based on the average All India Consumer Price Index for industrial workers which reflects changes in the cost of living. The All India Consumer Price Index for Industrial Workers showed a 0.2 point increase in March that reached 143.0. This indicates a positive sign for a DA hike. Despite a slight decrease from January's 143.2, this is seen as an optimistic sign.
The government will announce the new DA and DR to be implemented in July 2025 after the data for the 12 months up to June 2025 is available. The Consumer Price Index data for Industrial Workers for April, May and June 2025 are yet to come. Their average will determine the final DA in July.
The stability of inflation figures will determine the DA hike. The inflation figures have to remain stable or slightly get better in the following months so that a DA hike of 2 percent to 3 percent in July 2025 could be expected.
The DA for central government employees and pensioners was recently increased to 55 percent with a 2 percent hike. Based on this figure a 2 percent or 3 percent increase in DA is expected in July 2025.
The government announces a DA and DR hike twice a year. The announcements are made in March and September. The hike is applied retroactively every year between January and July. It is expected that a consistent pattern of changes will be followed in the upcoming DA and DR announcement.
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