The Union Cabinet has granted a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) for the central gov. employees and pensioners just before Diwali 2025. This festive boon will be a blessing for more than 1.16 crore people, 48 lakh employees, and 68 lakh pensioners amongst that lot.
What is DA?
DA is an allowance granted to offset the inflation effect on government employees and pensioners’ living. It is determined by inflation and updated two times a year, in January and July, according to the Consumer Price Index for Industrial Workers (CPI-IW).
New DA Rate in 2025
With the current upturn, the DA has risen from 55% to 58% of basic wages and pensions. The upward revision, which is effective from July 1, 2025, guarantees that the residual amount for July, August, and September will be processed along with the October salary or pension, just before Diwali.
Effect on Salary and Pension
The upward adjustment of DA will of course not be a direct impact on the monthly salaries of the employees and pensioners but rather, it will be a monthly income increase. Here is a very simple method for showing how much extra money people with different salary levels will receive:
| Basic Pay / Pension | Old DA @ 55% | New DA @ 58% | Monthly Increase | Annual Increase |
|---|---|---|---|---|
| ₹18,000 (minimum pay) | ₹9,900 | ₹10,440 | ₹540 | ₹6,480 |
| ₹22,500 | ₹12,375 | ₹13,050 | ₹675 | ₹8,100 |
| ₹30,000 | ₹16,500 | ₹17,400 | ₹900 | ₹10,800 |
| ₹40,000 | ₹22,000 | ₹23,200 | ₹1,200 | ₹14,400 |
| Pension ₹12,000 | ₹6,600 | ₹6,960 | ₹360 | ₹4,320 |
This additional income, along with arrears, will boost household budgets during the festive season.
Financial Implication for Government
The government is of the opinion that this DA increase will put an annual burden of around ₹10,084 crore on the exchequer. Nevertheless, the situation will favor the economy as the consumers are expected to spend more on Diwali.
Last DA Hike Under 7th Pay Commission
The 3% rise seems to be the final increase in DA under the 7th Pay Commission. The 8th Pay Commission is likely to be in place starting January 2026 and that could mean further modifications in pay and pension structures.
Conclusion
The DA Increase Before Diwali 2025 is a great relief for the central government employees and the pensioners. The families will not only have more money to spend on the thanksgiving shopping and celebrations but also, will not have to wait long for it because of the back pay and higher monthly salary. Moreover, the increase signifies the government’s attempt to tackle inflation and at the same time, sustain its workforce.