DA up 3% to 58%, 1.18 Cr Beneficiaries Get Arrears
- By Thetripurapost Desk, New Delhi
- Oct 01, 2025
- 453
Bringing much-needed relief to lakhs of families ahead of Diwali and Dussehra, the central government on Wednesday announced a 3% hike in Dearness Allowance (DA) for its employees and pensioners. The decision, taken at a cabinet meeting chaired by Prime Minister Narendra Modi, will benefit over 1.18 crore people and impose an additional ₹10,084 crore burden on the exchequer.
With this hike, effective from July 1, 2025, the DA has been revised from 55% to 58% of basic pay. Eligible employees will also receive three months’ arrears, further adding to the festive cheer.
A Big Festive Bonanza
This announcement is not just a financial adjustment but also a political and social signal. Coming just before major festivals, the hike is expected to provide employees with extra purchasing power, boosting consumer demand during the festive season.
Economists believe this will act as a stimulus for the economy, particularly for sectors like FMCG, electronics, textiles, and automobiles, which witness peak sales during October–November.
Who gets Benefits?
Employees: 4.92 million
Pensioners: 6.87 million
Total beneficiaries: 1.18 crore
The move will directly uplift household budgets at a time when inflationary pressures have been pinching middle-class families.
Looking Back: The Lowest Hike in 7 Years
Interestingly, just six months ago in March 2025, the government had raised DA by only 2%, the lowest increase in the last seven years. Traditionally, DA hikes range between 3% and 4%, but the modest increase earlier this year had sparked dissatisfaction among employees.
This latest decision brings the DA hike back in line with expectations, signaling that the government is responsive to both inflationary data and public sentiment.
Why DA Matters
Dearness Allowance is not merely a perk; it is a lifeline against inflation. Calculated based on the All India Consumer Price Index (AICPI), DA is revised twice a year—January and July—to ensure that employees and pensioners are shielded from rising prices.
Retail Inflation (CPI) → Measures prices paid by ordinary consumers.
Wholesale Inflation (WPI) → Tracks price changes at the wholesale level.
DA is linked to CPI, making it a crucial buffer for government employees in times of rising living costs.
Economic & Political Significance
The ₹10,084 crore hit to the treasury may seem steep, but experts argue that such spending acts as a direct injection of liquidity into the economy. With more money in the hands of employees and pensioners, festive spending will likely surge, benefiting businesses across India.
Politically, the timing of the announcement—just ahead of the festive season and amid rising demands from unions—underscores the government’s effort to keep its middle-class voter base satisfied.
In short, this DA hike is not just a financial adjustment. It is a festive bonanza, an economic stimulus, and a political message—all rolled into one.