Central government employees are eagerly awaiting the announcement of the Dearness Allowance (DA) hike in January 2025. The government is expected to increase the DA by 3%, which will raise it from 53% to 56%. This is based on the latest data from the All India Consumer Price Index (AICPI), which was at 144.5 in October 2024. If the AICPI rises slightly in the next few months, the DA will likely go up by 3%.
How is the DA Calculated?
The DA is calculated using the AICPI data, which tracks the changes in the cost of living. The formula used for the calculation is:
DA Percentage = [(Average AICPI over the last 12 months – 115.76) 115.76] × 100
This calculation ensures that the DA adjusts according to the increase in the cost of living, helping employees and pensioners keep up with inflation.
Impact on Salaries and Pensions
For employees, this increase in DA will directly affect their monthly salaries. For example, if an employee’s current salary is ₹18,000, a 3% hike will add ₹540 to their monthly earnings. Similarly, pensioners receiving ₹9,000 a month will get an extra ₹270.
The increase in DA is not fixed and varies according to an employee’s salary. So, higher-ranking employees will receive a larger hike in their DA.
Why Does the DA Hike Matter?
The DA hike helps government employees manage the rising cost of living, especially during times of inflation. The government calculates the DA twice a year, considering the average AICPI for two periods: January to June and July to December. The final DA increase is announced based on this data.
The expected 3% DA hike in January 2025 will be a welcome relief for central government employees and pensioners, improving their purchasing power amid rising living costs. However, the actual increase will depend on the final AICPI figures for November and December 2024. Keep an eye out for the official announcement in January 2025.