The festival season has begun in India and in the meantime, the central government has prepared to give a big gift to its more than 1.2 crore employees and pensioners. Before Diwali, the government is going to increase dearness allowance (DA) and dearness relief (DR) by 3%. This will directly affect the pockets of millions of families.
This increase in DA will be applicable from July 2025 and employees and pensioners will also get three months’ arrears. This means that an extra amount will be added to the October salary. This is being considered as a Diwali gift from the government, because everyone needs extra expenses during festivals.
How is DA decided?
Dearness Allowance is decided under the 7th Pay Commission. For this, the 12-month average of Consumer Price Index for Industrial Workers (CPI-IW) is taken as the basis. From July 2024 to June 2025, the average of CPI-IW was 143.6. On this basis, DA has increased from 55% to 58%. Last time the government had announced to increase DA on 16 October 2024. Now after a year, again just before Diwali, the government is going to give relief to the employees.
What will be the impact on salary and pension?
Suppose, the basic salary of an employee is Rs 50,000. Earlier, he used to get Rs 27,500 at the rate of 55% DA. Now, he will get Rs 29,000 at the rate of 58% DA. That is, he will get Rs 1,500 more every month. Similarly, if the basic pension of a pensioner is Rs 30,000, then he was getting Rs 16,500 at 55% DR. Now, he will get Rs 17,400 at 58% DR. That is, there will be a benefit of Rs 900 every month. The benefit will vary depending on the amount of salary and pension. But overall, this increase will provide relief to more than 1.2 crore families.
Enthusiasm will increase during festivals
Since the new DA will be given in the October salary along with the arrears of July, August and September, employees and pensioners will get extra money together. At a time when there is a festive rush in the market and expenses increase, this amount will work like a bonus. This will not only boost the morale of the employees, but will also increase consumption and shopping in the market.
Last hike of 7th Pay Commission
It is worth noting that this hike will be the last DA hike under the 7th Pay Commission. The 7th Pay Commission is ending on 31 December 2025. The government has announced the 8th Pay Commission in January 2025. However, its chairman, members and terms of reference have not been decided yet. It is believed that its recommendations will be implemented in late 2027 or early 2028. When the 8th Pay Commission is implemented, the DA will once again start from zero and will keep increasing from time to time according to inflation.
Impact on the economy
Economists say that this 3% increase in DA will increase the purchasing power of people and will support demand in rural and urban markets. Especially during the festive season, its positive impact can be seen on the economy.
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