Centre approves 3% DA hike for govt employees & pensioners

October 4, 2025 Finance Talk Valli Sarvani

The Union Cabinet has approved a 3% hike in Dearness Allowance (DA) for central government employees and pensioners, with effect from July 1, 2025.

This move aims to provide financial relief to nearly one crore beneficiaries, including both serving employees and retired personnel.

Dearness Allowance is a cost-of-living adjustment paid by the government to its employees and pensioners.

It helps offset the impact of inflation on daily expenses. The DA is revised twice a year, usually in January and July, based on the Consumer Price Index (CPI) for industrial workers.

With this hike, the DA rate will increase from 55% to 58% of the basic salary and pension.

Earlier this year, in March 2025, the government raised the DA by 2%, taking it from 53% to 55%.

The new revision adds another 3%, directly improving monthly take-home pay and pension amounts.

Here is an example:

An employee earning a basic salary of ₹50,000 currently receives ₹27,500 as DA (55% of basic).

With the 3% increase, the DA rises to ₹29,000, offering an additional ₹1,500 per month. This increase is expected to offer much-needed support amid rising living costs.

The decision, announced ahead of the festive season, is expected to have a positive impact on consumer spending.

Employees will have extra money in hand during upcoming festivals like Dussehra and Diwali. The timing also mirrors the government’s earlier pattern of announcing DA hikes before major festivals.

Last year, in October 2024, the Union Cabinet had also approved a similar 3% DA hike, effective from Diwali, showing a continued effort to support employees’ financial well-being.

This latest increase reinforces the government’s commitment to help workers and pensioners manage inflation. It also plays a role in boosting economic sentiment during key periods of the year.

The DA hike brings timely relief and puts more money into the hands of those who serve the nation.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on March 26, 2017