Centre Hikes DA/DR by 3%: In a major relief for government employees and pensioners, the Centre on Wednesday announced a 3% hike in Dearness Allowance (DA) and Dearness Relief (DR). The revision raises the existing rate from 55% to 58% of basic pay and pension.
The increase, aimed at cushioning the impact of rising inflation, will benefit around 1.18 crore people, including nearly 50 lakh central government employees and 68 lakh pensioners. The hike comes into effect from July 1, 2025 and arrears for July to September are expected to be released soon.
Purpose of the Hike
DA and DR are allowances provided to government employees and pensioners to offset the effect of inflation and rising cost of living. The rates are revised twice a year—January and July—based on recommendations of the All-India Consumer Price Index for Industrial Workers (AICPI-IW).
Financial Implications
The 3% increase is estimated to put an additional annual burden of ₹9,500 crore (approx.) on the government’s exchequer. Officials said the hike was essential to ensure that employees and retirees are shielded from the current surge in prices.
Background
The last DA/DR hike was announced in March 2025, when the rate was raised from 50% to 55%. With the latest revision, the total increase in 2025 alone now stands at 8 percentage points.
Wider Impact
The DA/DR revisions are not just limited to central government staff—employees in public sector undertakings (PSUs), state governments (which follow central rates), and autonomous bodies are also expected to see a proportional increase, providing relief to a much larger section of the salaried and retired population.
