Government Announces 3% Dearness Allowance Hike Ahead of Dussehra and Diwali

The Union government has approved a three per cent increase in Dearness Allowance (DA) and Dearness Relief (DR), effective from July 1, Union Minister Ashwini Vaishnaw announced on Wednesday. The move is being presented as a festive “gift” for government employees and pensioners ahead of Dussehra on Thursday and Diwali later this month.

This marks the second DA hike in 2025. In March, a two per cent increase was announced, raising DA payouts from 53% of basic pay to 55%, following a three per cent hike in October 2024. DA is meant to compensate government employees for inflation.

With the current increase, an employee with a basic salary of Rs 60,000 will receive an additional Rs 34,800 as DA, up from Rs 33,000 after the March revision. The hike aligns with the Consumer Price Index (CPI) for industrial workers, which forms the basis for the bi-annual revisions of Dearness Allowance.

Further salary revisions will be decided by the Eighth Pay Commission, announced in January. The commission’s recommendations, including the fitment factor—a multiplier applied to basic pay—could lead to salary hikes ranging between 13% and 34%. However, DA (currently 55%) is expected to be reset to zero and merged with basic pay once the commission’s recommendations take effect from January 1, 2026.

Experts note that the effective increase may be moderated, but it will still benefit employees and pensioners, as pensions are linked to basic pay and DA. The 7th Pay Commission had earlier reviewed nearly 200 allowances, abolishing 52 and merging several others to simplify the salary structure and enhance transparency.