DA Hike Cancelled? Lakhs of Govt Employees Face Big Disappointment

In March, the central government gave some relief to central government employees and pensioners by increasing the Dearness Allowance (DA) by 2 percent. The DA was raised from 53 percent to 55 percent. But this time, a big shock is expected. Those who were waiting for the next DA hike are likely to be disappointed.

Many experts believe that there is almost no chance of a DA increase this time. In fact, the DA might even be reduced by 2 percent or completely put on hold. But why is there such fear? Let’s find out in today’s report.

Why is the DA increase getting smaller?

After 2019, the Dearness Allowance (DA) hike was stopped for three periods because of the COVID-19 pandemic. In 2021, the central government restarted DA hikes and increased it by 3 to 4 percent several times. But recently, the increase rate has become very slow. For the last few hikes, the government has not increased DA by more than 2 percent.

What is the reason for the slow DA hike?

According to the central government, the main reason is the drop in retail inflation. A recent report shows that the Consumer Price Index (CPI) has gone down in the first three months of 2025 — from January to March. In March, the CPI was only 3.38 percent, while in February, it was 3.61 percent. This is the lowest figure in the last 5 years.

Why does DA depend on CPI?

DA is mainly linked to the Consumer Price Index. When the CPI increases, it means the prices of goods are going up, and the government raises DA to help employees cope with higher living costs. But if CPI falls, it means prices are not rising much, so the government sees no need to increase DA. This is their reasoning.

What could happen next?

Experts believe that between July and December 2025, the DA hike may be very low. If inflation continues to stay low, the DA hike in December could drop below 2 percent — or it might not happen at all.

Who will be affected?

Around 48 lakh central government employees and 74 lakh pensioners will be directly affected by this. Many of them were expecting a DA hike. If DA is not increased, it could impact their salaries, allowances, and daily spending plans.