Prior to Diwali, the Union Cabinet, presided over by Prime Minister Narendra Modi, is expected to approve a 3% hike in the dearness allowance (DA). The decision will benefit more than one crore retirees and employees of the central government.

This hike will provide much-needed financial relief ahead of the festival, with the allowance now representing 53% of basic wage instead of 50%.

DA hike will go into effect from 1 July 2024, meaning that workers will also receive their back pay for the months of July, August, and September.

The increase would result in an extra Rs 540 in take-home pay for an entry-level government worker whose base pay is Rs 18,000 per month.

The Confederation of Central Government Employees and Workers has asked Nirmala Sitharaman, the minister of finance, to address the delay in announcing the DA/DR hike.

DA is normally revised by the government twice a year, in January and July, but this year’s July raise has been postponed.

Pensioners receive dearness relief, which shields them from inflationary pressures, while current employees profit from DA.

The All-India Consumer Price Index (AICPI) serves as the basis for the DA adjustment. It monitors changes in retail prices and assists in adjusting employee compensation to reflect increased living expenses. The increase will lessen some of the financial burden on consumers as inflation continues to affect them.

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