Union Cabinet approves 2% DA hike for central govt employees

In a relief for central government employees and pensioners, the Union Cabinet chaired by Prime Minister Narendra Modi on Friday approved an additional instalment of Dearness Allowance (DA) and Dearness Relief (DR), effective January 1, 2025. The move increases DA and DR by two per cent to 55% of the basic pay or pension, according to the PIB bulletin.

The revision aims to offset the impact of inflation and rising prices, ensuring financial stability for government employees and retirees. The hike, based on the formula recommended by the 7th Central Pay Commission, is expected to benefit approximately 48.66 lakh central government employees and 66.55 lakh pensioners.

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The decision will have a financial impact of about Rs 6,614.04 crore per annum for the exchequer.

The Dearness Allowance and Dearness Relief are revised periodically to counteract the impact of inflation on employees and pensioners.

Last year, the Union Cabinet approved a 3 per cent increase in DA and DR, raising the then-existing rate of 50%.

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This additional instalment of DA over the then existing rate of 50% of the Basic Pay/Pension is to compensate against price rise, the government said in a statement.