Government employees' DA raised by 4%, reaching 50%

Impact on Exchequer

The government recently announced an increase in Dearness Allowance (DA) and Dearness Relief (DR) for government employees and pensioners, respectively. Effective from January 1 of this year, the DA for employees and DR for pensioners has been raised by four percentage points. This hike brings the DA to 50% of the basic pay, up from the previous rate of 46%.

The increment in DA and DR will result in an annual burden of Rs 12,869 crore on the exchequer. Additionally, for the fiscal year 2024-25 (January 2024 to February 2025), this impact is estimated to be Rs 15,014 crore.

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Other increases in allowances

Apart from the DA and DR hike, various other allowances have also been increased. This includes a 25% raise in transport allowance, canteen allowance, and deputation allowance. Furthermore, House Rent Allowance has been enhanced from 27%, 19%, and 9% of the basic pay to 30%, 20%, and 10%, respectively. Gratuity benefits have also been augmented by 25%, with the maximum ceiling raised to Rs 25 lakh from the previous Rs 20 lakh.

The increase in DA and DR aligns with the recommendations of the 7th Central Pay Commission and follows an accepted formula. This ensures that the adjustments are in line with the prevailing economic conditions, aiming to mitigate the impact of inflation on the overall remuneration of government employees and pensioners.

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