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DA hike: The department of central government employees expecting a rise in their Dearness Allowance (DA) payments are likely to hear good news soon. It appears that a DA increase will be decided in the forthcoming cabinet meeting which is usually headed by Prime Minister Modi on Wednesday evenings.
That said, government employees should consider the All India Consumer Price Index for Industrial Workers (AICPI-IW) for January 2025 has been brought down by 0.5 points to 143.2, ahead of the proposed dearness allowance (DA) increase for employees of the central government. This is the second month in a row of decrease, as the AICPI-IW on industrial workers in December 2024 was also reduced by 0.8 points to 143.7.
On a monthly basis the Labour Bureaus of Shimla under Ministry of Labour and Employment develop the index of consumer prices for industrial workers from the collected market price information from 317 selected towns and cities over 88 regions known to be important from an industrial point of view.
The All India Consumer Price Index for Industrial Workers (CPI-IW) for January, 2025 dropped by half a point to 143.2. The Labour Bureau communicated this information in a pressnote dated March 13, 2025.
Dearness allowance (DA) is an extra payment made available to an employee in addition to the basic salary he or she receives. It is calculated as a portion of the basic pay to assist in reducing the influence of inflation on the employee's wages. While in service, the employees are referred to as an allowance as Dearness Allowance while for the pensioners it is quoted as Dearness Relief. Recently, employees of the central government were said to be getting 53% dearness allowance for them basic pay.
As indicated by the labour bureau, the consumer price inflation for industrial workers has declined on a monthly scale and markedly at rate from the AICPI-IW data as of January 2024. The recorded inflation for January 2025 year-on-year was at 3.10 % which is a reduction from 4.59 % in the January of 2024.
AICPI-IW for December 2024 and January 2025
Serial Groups Dec 2024 Jan 2025
I Food & Beverages 151.3 148.3
II Pan, Supari, Tobacco & Intoxicants 162.9 163.5
III Clothing and Footwear 146.7 147.2
IV Housing 131.6 134.6
V Fuel and Light 148.6 148.6
VI Miscellaneous 138.3 138.6
- General Index 143.7 143.2
Expected DA hike
The central government uses the AICPI-IW inflation figures to set changes in dearness allowance for their employees as per the directives of the 7th pay commission. The decline seen in month-on-month and year-on-year AICPI-IW data supports the anticipated 2% rise in DA from 1st January 2025.
This increase in Dearness Allowance (DA) of 2% will bring about an increase of Rs 360 for MTS employees and their basic salary of Rs 18,000.
An employee earning a basic salary of Rs 18,000 at present gets a DA of Rs 9,540 at (53%). Should an increase of 2% be implemented, the DA would increase to Rs 9,900 thus resulting in an increase of Rs 360 to the salary. In the case of a 3% hike, the increase of 540 would change the DA to 10,080.
Starting January 1st, 2025 the announcement regarding the DA hike will be put into action. From this date, employees will start recieving arrears corresponding to the sum they qualify for post the stated date.
The central government makes a bi-annual announcement regarding the Dearness allowance in order to support its employees in dealing with the rise of inflation. This portion of an employee’s salary is calculated through a certain percentage of the employee’s basic pay. An increase of 2% is anticipated, changing the rate from 53% to 55%.
In July 2024, the government employees were given a 3% DA increase which upped the new DA from 50% to 53%.
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