Diwali bonanza: Govt announces 3 per cent hike in DA for central govt employees

The Union Cabinet has approved a 3per centincrease in Dearness Allowance (DA), raising it from 50per cent to 53 per cent of basic pay. This decision was announced on Wednesday by Information and Broadcasting Minister Ashwini Vaishnaw.

Effective date and impact

The DA hike will take effect from July 1, 2024.This increase is expected to provide significant relief to around 11.5 million (1.15 crore) central government employees and pensioners facing the pressures of rising living costs.

In a related move, Chhattisgarh Chief Minister Vishnu Dev Sai announced a 4per centhike in Dearness Allowance for state government employees, increasing it to 50per centof their basic salary, effective October 1, 2024.

Understanding dearness allowance

Dearness Allowance is a financial benefit provided to government employees to help offset the effects of inflation. It is calculated as a percentage of the employee's basic salary and is revised every six months based on the All India Consumer Price Index (AICPI), which tracks retail price changes.

This latest hike follows a 4 per cent increase in March 2024, which had previously raised DA to 50per cent

The Seventh Pay Commission states that when DA hits 50per centor more, certain allowances, including house rent allowance (HRA), must be revised. This took place earlier this year.

This ongoing commitment to revising allowances aims to ensure that government employees receive adequate compensation in light of inflationary pressures.

(With inputs from agencies)