New Delhi / Sri Vijaya Puram, Apr 16: The Union Cabinet’s decision to approve a 2% hike in Dearness Allowance (DA) and Dearness Relief (DR) has brought a bonanza for central government employees and pensioners across the country — including a significant number in the Andaman and Nicobar (A&N) Islands, where a large portion of the population is employed in the government sector.
Chaired by Prime Minister Narendra Modi, the Cabinet decision raises the DA/DR from the existing 53% to 55% of Basic Pay and Pension, effective from January 1, 2025. The hike aims to cushion the impact of inflation and rising prices, and comes amid growing demands from employees’ unions.
According to a statement issued by the Finance Ministry, the revision is in line with the formula recommended by the 7th Central Pay Commission and is “a periodic adjustment based on inflation data, intended to maintain the purchasing power of government servants.”
The latest revision will benefit approximately 48.66 lakh employees and 66.55 lakh pensioners nationwide. The additional financial implication is pegged at ₹6,614.04 crore annually.
Though modest in percentage terms, the hike is being seen as timely, especially in the context of rising costs of essential goods and services.
The DA and DR are cost-of-living allowances provided to central government employees and pensioners to help offset the effects of inflation.
While the immediate macroeconomic impact may be limited, economists say the move underlines the government’s commitment to a welfare-oriented compensation structure for its workforce.
