The Union Cabinet has approved a 2 per cent increase in dearness allowance (DA) for central government employees, raising it from 53 per cent to 55 per cent of basic pay. This revision is aimed at offsetting inflationary pressures and comes ahead of the implementation of the 8th Pay Commission.

The last revision in October 2024 saw a 3 per cent hike, bringing DA to 53 per cent. The current increase follows the government’s policy of periodic adjustments to cushion employees against rising costs.

The 8th Pay Commission, sanctioned in January 2025, is set to undertake a comprehensive review of salaries and allowances. The commission’s formal constitution, including the appointment of a chairman and members, is expected soon. While DA and Dearness Relief (DR) will continue to be updated every six months, this increment is likely the final adjustment before the commission begins discussions with stakeholders.

Employee unions have pushed for the integration of DA with basic pay before the 8th Pay Commission’s recommendations take effect. Historically, the 5th Pay Commission mandated merging DA with basic pay once it exceeded 50 per cent. The last merger occurred in 2004 before the practice was discontinued under the 6th and 7th Pay Commissions.