Government Approves 3% Dearness Allowance Increase for Employees Ahead of Festive Season

New Delhi:

The government has announced a three percent increase in Dearness Allowance and Dearness Relief, effective from July 1, as confirmed by Union Minister Ashwini Vaishnaw on Wednesday. This enhancement comes as a timely festive benefit ahead of Dussehra and the upcoming Diwali celebrations.

The three percent hike aligns with earlier predictions; sources had informed NDTV that government employees and pensioners could expect this increase as the festive season commences.

This represents the second adjustment in 2024, following a two percent increase implemented in March that elevated DA payments from 53 percent to 55 percent of basic salary. A previous three percent enhancement had been granted last October.

Dearness Allowance serves as an inflation compensation mechanism for government employees.

The current increase is expected to reflect movements in the Consumer Price Index for industrial workers, which provides the foundation for the bi-annual DA revisions.

For an employee receiving a basic salary of Rs 60,000, this adjustment will increase their DA component to Rs 34,800, up from the previous Rs 33,000 following the March revision.

Future salary and allowance modifications will be determined by the Eighth Pay Commission, announced in January. However, the official notification detailing its membership and terms of reference remains pending.

Salary increments will be calculated using the 'fitment factor', a multiplier applied to basic pay.

Experts project this factor to range between 1.83 and 2.86, potentially resulting in increases of approximately 13 to 34 percent. However, the current DA of 55 percent will likely be reset to zero and integrated with basic pay once the commission's recommendations take effect from January 1, 2026.

While this integration may moderate the apparent increase, the adjustment remains beneficial since pensions are calculated based on basic pay and DA. The previous Pay Commission had reviewed approximately 200 allowances, eliminating 52 and consolidating others to enhance transparency and simplify the salary structure.