In a major festive relief, the Union Cabinet has announced a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. The decision, taken on Wednesday, will benefit over 1.17 crore people, including 49.19 lakh employees and 68.72 lakh pensioners across India.
The revised DA/DR hike is effective from July 1, 2025, raising the existing rate from 55% to 58% of basic pay/pension. This move aims to offset the rising cost of living and inflation pressures, ensuring financial stability for employees and retirees.
Union Minister Ashwini Vaishnaw confirmed that the annual financial implication of this hike will be Rs 10,083.96 crore. Despite the hefty expenditure, the government emphasized its commitment to supporting employees and pensioners, especially during the festive season.
GST Rate Rationalisation: Dual Festive Cheer
Interestingly, this DA/DR revision comes shortly after the Centre reduced GST rates on daily essentials such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice creams. Aspirational products like TVs, ACs, and washing machines have also become cheaper, further adding to the Diwali cheer for households.
Based on 7th Central Pay Commission Recommendations
The DA/DR hike follows the formula laid out by the 7th Central Pay Commission, which links adjustments to the Consumer Price Index (CPI). The government usually revises DA/DR twice a year—in January and July. The last revision, announced in March, was applicable from January 1, 2025.
Recent Perks for Central Govt Employees
This decision comes close on the heels of the Union Cabinet’s approval of a performance-linked bonus for railway employees, signaling a series of employee-friendly measures before the festive season.
What It Means for Employees and Pensioners
- Employees: Central government employees will see a direct increase in their take-home salary from October onwards.
- Pensioners: Retirees will benefit from higher pension payouts, helping them cope with rising living costs.
- Economy: With additional spending power, the move is likely to boost consumer demand during the festive season.
The 3% DA/DR hike is not just a financial relief but also a morale booster for central government employees and pensioners ahead of Diwali. Combined with lower GST rates on essentials and consumer goods, this decision ensures a double festive cheer for millions of Indian households.
