In a positive development for Central government employees, the Cabinet has approved a 3% hike in the dearness allowance (DA), as reported by NDTV. Typically, the government announces changes to DA and dearness relief (DR) twice a year, in March and September. However, this announcement came in October, with the hike effective retroactively from January and July.
The DA adjustments are based on the Consumer Price Index—Industrial Workers (CPI-IW), which rose from 138.8 to 141.4 points between December 2023 and June 2024. Consequently, the DA percentage is projected to increase from 50.28% to 53.36%. The government had previously raised DA from 46% to 50% effective January 1, 2024.
Additionally, the increase in DA will lead to a 25% rise in the deputation allowance, transport allowance, and canteen allowance. The House Rent Allowance (HRA) will also see an adjustment, increasing from 27%, 19%, and 9% of basic pay to 30%, 20%, and 10%, respectively. Gratuity benefits will be enhanced by 25%, with the ceiling raised from ₹20 lakh to ₹25 lakh, providing further financial relief to employees and pensioners alike.
