A three per cent increase in Dearness Allowance, or DA, is expected for government employees and pensioners as the festive season kicks off this month, sources told NDTV Wednesday.
The hike, once approved by the Union Cabinet, will take retrospective effect from July 1.
And, if approved, it will be the second hike this year; in March a two per cent increase was announced, taking DA payouts from 53 per cent of basic pay to 55 per cent.
And that was four months after another hike – in October last year – of three per cent.
DA is provided to government employees to compensate for inflation.
The hike this month is expected to align with movement of CPI, or Consumer Price Index, data for industrial workers that forms the basis for bi-annual revisions of the Dearness Allowance.
The proposed hike will mean an employee with a basic salary of Rs 60,000 will receive an additional Rs 34,800 as DA, up from Rs 33,000 they were being paid after the March increase.
Further revisions of salaries and allowances will be decided by the Eighth Pay Commission that was announced in January. However, an official notification about its members and ToR, or terms of reference, is awaited.
Salary increments will depend on the ‘fitment factor”, a multiplier applied to basic pay.
Experts estimate this to be between 1.83 and 2.86, which could mean a hike of roughly 13 to 34 per cent. However, the DA – 55 per cent for now – will likely be reset to zero and merged with basic pay after the commission’s recommendations are implemented from January 1, 2026.
This means the effective increase might be moderated but still beneficial, as pensions are linked to basic pay and DA. The 7th Pay Commission had reviewed nearly 200 allowances, abolishing 52 and merging others to make the salary structure transparent and less complex.