Even before the new financial year begins, the Modi government has made an important decision regarding government employees.
On Friday, the central government announced a 2% increase in Dearness Allowance (DA). This means DA has now increased from 53% to 55%, leading to a salary hike for lakhs of employees.
Contents
What is Dearness Allowance (DA) and Why is it Given?
Dearness Allowance (DA) is provided to government employees to reduce the impact of inflation.
While basic salary is determined by the Pay Commission every 10 years, DA is revised every 6 months to help employees cope with rising prices.
The last DA revision happened in July 2024, when it was increased from 50% to 53%. Now, with the latest hike, it has gone up to 55%.
When and How is DA Increased?
The government revises DA twice a year, in January and July. Although the announcement may sometimes be delayed, DA calculations are based on the AICPI-IW index, which tracks inflation data for January and December.
The central government’s DA decision applies only to central government employees, but state governments usually follow later. However, states can choose to increase DA at a different time or rate.
What is the AICPI-IW Index?
The AICPI-IW index (All India Consumer Price Index for Industrial Workers) is an official measure of inflation used to determine DA. This index is published by the Labor Bureau under the Ministry of Labor.
How Much Will Salaries Increase Due to DA Hike?
Let’s take an example:
If an employee’s basic salary is ₹50,000, then at 53% DA, they were receiving ₹26,500 as DA.
After the 2% increase, DA has now risen to 55%, meaning the new DA amount is ₹27,500.
This results in a salary increase of ₹1,000 per month.
This increase will bring some financial relief to employees, helping them manage rising expenses better.