This Diwali Union Cabinet approving a 3% hike in Dearness Allowance for Central government employees
The Central government of india has decided a significant financial policy through the union Cabinet: the approval of a 3% rise in Dearness Relief (DR) for retirees and Dearness Allowance (DA) for current Central government employees.
The Central government of india has decided a significant financial policy through the union Cabinet: the approval of a 3% rise in Dearness Relief (DR) for retirees and Dearness Allowance (DA) for current Central government employees. The overall allowance rate will now be 58% of basic salary and pension instead of the current 55%. This action, which was carried out under the systematic review procedure set up under the 7th Central Pay Commission (CPC), is a required method for inflation compensation. Official Press release by government: pib.gov.in
The overall central government policy Decision:
The announcement formalizes the bi-annual adjustment to protect the real income value of government personnel and retirees. The increase is substantial in its collective fiscal reach, benefiting approximately 4.92 million Central government employees and 6.87 million pensioners, totaling nearly 11.8 million individuals. This rise in DA and DR results in a combined annual financial burden on the central exchequer calculated at ₹10,083.96 crore.
The 3% increase takes effect subsequently on July 1, 2025. Additionally, besides to their October income, workers and retirees are expected to get arrears for the three months prior—July, August, and September. The big holiday seasons, especially Dussehra and Diwali, are closely aligned with this well-planned lump sum payout. This strategy maximizes the influence on national consumption in the last quarter of the year by providing both mandated inflation relief and an instantaneous, significant increase in family cash.
Approximately 6.872 million pensioners and 4.919 million central government workers will profit from this action. The rise ensures a methodical adjustment of wages and pensions in accordance with inflation by adhering to the recognized formula based on the recommendations of the 7th Central Pay Commission.
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