The Indian government led by Prime Minister Narendra Modi hiked Dearness Allowance (DA) for central government employees by 2 per cent on Friday (March 28), according to the Economic Times report.

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The announcement has increased Dearness Allowance from 53% to 55%, offering a salary boost to employees ahead of the anticipated 8th Pay Commission. The previous DA hike had happened in July 2024, when it was raised by 3 per cent to stand at 53 per cent.

Dearness Allowance (DA) is given to government employees to help them cope with rising inflation and ensure their salaries meet the rising expenses. Unlike basic salaries that are set by the Pay Commission every 10 years, DA is adjusted periodically keeping in mind the inflation trend. DA rate is based on the All India Consumer Price Index (Industrial Workers) reading for January and December.

Who benefit

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The hike, which was earlier expected around the festival of colours Holi, will benefit about 48.66 lakh Central Government employees and 66.55 lakh pensioners and family pensioners. The hiked salary for the month of March along with arrears for January and February will be paid to the employees.

The hike in Dearness Allowance and Dearness Relief will together cost the central exchequer Rs. 6614.04 crore per annum, reported the media outlet.

Can Centre increase DA for state government employees?

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The Union Cabinet  has the powers to increase DA only for the central government employees. States largely follow the Centre but it is not biding on them. In fact they can increase the DA out of turn.