At least in the very late nineties and early 2000s, there was a big relief for workers and pensioners due to a DA increase during inflationary times. It is a well-known fact that the DA points, in general, get revised on a biannual basis, in January and July, so that the salary and pensions might accordingly be adjusted as per the cost of living index.
Dearness Allowance Meaning
It is an allowance to offset any increase in the cost of living for central employee, PSE employees, or pensioners. It is paid as a certain percentage of a basic pay to compensate for inflationary depreciation of a person’s purchasing power. Essentially, DA attempts to keep the remuneration in terms of real value.
The Rate Of DA And The Effects Thereof
In July 2025, the DA rate was raised by 4%, thereby increasing DE to 54% for Central government employees under the 7th Pay Commission. This would naturally immensely increase the take-home salary and pensions for several hundred thousand employees and pensioners.
For a government employee drawing a fixed salary of ₹30,000:
- Earlier DA @ 50% = ₹15,000
- DA now @ 54% = ₹16,200
- Increased DA = ₹1,200 per month
This extra DA, or ₹14,400 on an annual basis for these families, is quite substantial.
How Is DA Computed?
The calculation of DA is based on the All India Consumer Price Index (AICPI). The formula states that:
- DA (%) = (Average of CPI for the last 12 months – 261.4) / 261.4 × 100
The Government has adopted a practice of reviewing such calculations twice a year, based on the CPI data that is published by the Labour Bureau.
Who Gets It?
- Central Government employees
- Pensioners under the Seventh Pay Commission
- Family pensioners
- Defence and railway personnel
Also, the revision of DA is made in conjunction with the release of arrears pending, which shall be credited in the salary for the ensuing month. Pensioners have their DR proportionately enhanced, which is paid at the same rate as DA.
Conclusion
A timely measure to cool off inflationary pressures and provide financial relief is the latest hike in DA. It is advised to employees and pensioners to check their payslips and pension statements for the recalculated amount to ensure that they are being paid the correct revised amount.
Also Read :July 2025 DA Hike: Central Govt Employees Likely To Get 3% Raise