Centre Hikes DA/DR : The Union Cabinet has approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR) for 49.19 lakh central employees and 68.72 lakh pensioners, effective July 1, 2025. The move will cost the exchequer ₹10,083.96 crore annually.
Centre Announces 3% DA/DR Hike
In a significant relief for government staff and pensioners, the Union Cabinet on Wednesday approved a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR). The revision will benefit nearly 1.18 crore people, including 49.19 lakh Central Government employees and 68.72 lakh pensioners across the country.
The revised DA/DR, which is calculated on the basis of the 7th Central Pay Commission recommendations, will come into effect from July 1, 2025. With this decision, the DA/DR rate has increased from 55% to 58% of the basic pay or pension.
Annual Cost of ₹10,083.96 Crore
Briefing the media after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the combined financial impact of this increase on the government’s exchequer will be ₹10,083.96 crore per annum.
“The hike aims to compensate employees and pensioners against rising prices and inflation. It reflects the government’s continued commitment to protecting the real income of its workforce and retirees,” Vaishnaw added.
Why the DA/DR Hike Matters
Dearness Allowance and Dearness Relief are crucial components of salary and pension structures. While DA is given to employees to offset the impact of inflation, DR is extended to pensioners. Both are revised periodically in line with cost-of-living adjustments, ensuring that rising inflation does not erode purchasing power.
This latest hike, although modest, comes as a welcome step for lakhs of households dependent on government salaries and pensions. It also signals the Centre’s proactive stance in adjusting incomes to inflation trends.
Key Highlights
- DA/DR hiked by 3%, effective July 1, 2025.
- Will benefit 1.18 crore people (49.19 lakh employees, 68.72 lakh pensioners).
- Total financial burden on the exchequer: ₹10,083.96 crore annually.
- Based on the formula recommended by the 7th Central Pay Commission.
- DA/DR rate now stands at 58% of basic pay/pension.
Summary
The Union Cabinet’s decision to raise DA and DR by 3% is set to bring financial relief to more than 1.18 crore employees and pensioners. Effective from July 1, 2025, the move will not only offset inflationary pressures but also reaffirm the government’s policy of safeguarding the real incomes of its staff and retirees. With an annual outgo of ₹10,083.96 crore, the measure highlights the Centre’s balancing act between fiscal responsibility and employee welfare.