The central government has granted its approval for a new hike in Dearness Allowance (DA) and Dearness Relief (DR) that will be applicable for the year 2025 and thus ensured a little more financial support for both the employees and the pensioners. With the latest announcement, DA has been increased by 8% and the new rate moved up from 57% to 65%, beginning on the 1st of January, 2025. This revision is expected to help the beneficiaries of government pensions to hold on to their purchasing power against the inflation in the economy.
Who Will Benefit From This Increase?
The increase will have a direct impact on almost 49 lakh central government employees and more than 68 lakh pensioners who are the beneficiaries of this hike throughout the country. The active employees will get a rise in their monthly salary corresponding to the increased DA portion, whereas the pensioners will get a higher DR which will result in an increase in their pension. For those retirees whose main source of income is the pension, this increase in the amount of the pension has been a great financial relief.
Why The Government Increased DA To 65%
The revisions of DA and DR are based on the Consumer Price Index for Industrial Workers (CPI-IW), which is a crucial indicator of the inflation pattern in the country. The index over the past months has shown the inflation to be mostly due to the price of food, fuel, transport, and essentials. In order to mitigate the effect of inflation on the government employees and pensioners, the government has come up with an 8% hike in DA and DR which is one of the biggest increments in recent years.
How Much Extra Salary And Pension To Expect
The 8% increase will be different for each employee and for the pensioners according to their basic pay.
Moderate increases will be seen by those with lower basic pay which will assist them in managing their daily expenses.
People with high basic pay will get more and especially those passing to retirement as DA influences defendant benefits like leave encashment and gratuity.
The hike is particularly advantageous to retirees since their fixed revenue hardly ever comes close to the level of price increases. The increase in DR to 65% will make it possible for pensioners to see a significant increase in their monthly pensions.
The Government’s Financial Impact
On one side, the decision is a relief for many people, but on the other side, it also puts a heavy financial load on the government. The annual increase in the total expenditure due to the DA/DR hike is anticipated to be in the range of thousands of crores. Still, the decision illustrates the government’s determination to protect the staff and the retirees from the effects of inflation.
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