Government Likely to Announce DA Hike Before Holi: What to Expect

As Holi approaches, central government employees and pensioners await an official announcement regarding a Dearness Allowance (DA) and Dearness Relief (DR) hike. The government revises these allowances twice a year, in January and July, to help offset inflation. While the January revision is usually announced around Holi, the July revision is typically declared near Diwali. As per news Reports, a 2% DA increase is likely, bringing the revised rate to 55% of basic pay. However, the final decision depends on Union Cabinet approval.

DA Calculation and Previous Hikes

The DA rate is calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), compiled by the Labour Bureau in Shimla. The formula differs for central government and public sector employees:

• For central government employees:

DA (%) = [(Average AICPI for the past 12 months (Base Year 2001=100) – 115.76) / 115.76] x 100

• For public sector employees:

DA (%) = [(Average AICPI for the past 3 months (Base Year 2016=100) – 126.33) / 126.33] x 100

The last DA hike was announced on March 7, 2024, when the Cabinet increased DA to 50% from 46%. Another 3% hike was approved on October 16, 2024, raising DA to 53%, effective from July 1, 2024.

Upcoming Hikes and the 8th Pay Commission

With the 8th Pay Commission set to be implemented in 2026, discussions have begun on whether DA will be reset and merged into basic pay. The commission’s recommendations are expected to be finalised by the end of the ongoing financial year and implemented in the next fiscal year.

Before this transition, three more DA hikes under the 7th Pay Commission are anticipated—two in 2025 and one in 2026. The upcoming January 2025 hike is expected to be 2%, bringing DA to 55%, subject to Cabinet approval.

Conclusion

The expected DA hike before Holi reflects the government’s ongoing adjustments to counter inflation for its employees and pensioners. With the 8th Pay Commission on the horizon, further changes in pay structure and DA calculations are anticipated, ensuring financial stability for government workers.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.