Civil servants and pensioners in the central government have reasons to celebrate as they are expected to receive an enhanced Dearness Allowance (DA) and Dearness Relief (DR) from January 2025. They have brightened the financial situation in their households because this increase concerns their wages and pensions.
What is DA and DR?
- Dearness Allowance (DA) is paid to the employees in order to act as an inflation allowance.
- Dearness Relief (DR) is paid to pensioners in order to enable them to afford the escalating costs of living.
- DA and DR are reviewed every six months in accordance with the AICPI, which is an index of inflation.
How DA and DR are Calculated?
The DA and DR for January and July each year are determined based on the AICPI data from the previous six months:
- The January update utilizes data from July to December.
- The July update employs data up to June.
Possible Hike in January 2025
Therefore, calculation of the DA and DR increase for January 2025 will be relative to the data from June to December 2024 of the AICPI. In this regard, the good news is that in the AICPI for September 2024, an increase in the DA for employees could be up to 54%. This increase will enable workers meet the inflation rates and have better standards of living.
Recent DA Increase
In october 2024 the Govt raised DA to 3% which augmented the total DA to 53%. This adjustment has already given a boost to at least remuneration of the government employees.
8th Pay Commission: A Big Update
Another great news is that there are indications that the 8th Pay Commission might be set soon. The last was 7th Pay Commission was implemented in 2016 and similarly it has been predicted that 8th Pay Commission may be implemented by the end of year 2025 and It may give even bigger percentage of salary increase.
Salary Increment with the 8th Pay Commission
Minimum wages may rise by as much as 52%, from ₹18,000 to ₹34,560.
Pay level 5 may increase the maximum wage band from ₹2.5 lakh to ₹4.8 lakh a 92 percent increase.
Increase in Minimum Wage: Pensioners Also Set to Benefit
On the 8th Pay Commission too pensioners will be in for good news. According to current rates pension could climb from ₹9,000 at the lowest to ₹17,280 within the same bracket for employees, and from ₹1,25,000 at the upper limit to ₹2,40,000 for pensioners.
