Govt hikes DA for central employees pensioners by 3%:The new hike to be effective retrospectively from July 1

The government has hiked the dearness allowance (DA) for central government employees and pensioners by 3% to 58%. This decision was taken in the cabinet meeting held on Wednesday, October 01, 2025, chaired by Prime Minister Naendra Modi. Now, the DA for employees will increase from 55% to 58%. This increase will be effective from July 1, 2025. 49.2 lakh central government employees and 68.7 lakh pensioners will benefit from this. DA Increased by 2% Six Months Ago In March, the allowance was increased by 2%. At that time, it was the lowest increase in seven years. Usually, the increase in DA is between 3% and 4%, but at that time the increase was only 2%. DA is Given to Deal with Inflation Because of rising inflation, the DA is given to government employees and pensioners to maintain their standard of living. DA rates are determined based on the All India Consumer Price Index (AICPI), and it is updated every six months. What is the All India Consumer Price Index? There are two types of inflation in India. One is retail and the other is wholesale inflation. The retail inflation rate is based on the prices paid by ordinary customers. It is also called the Consumer Price Index (CPI). While, wholesale inflation measures price fluctuations at the wholesale level. Since DA is linked to CPI-based retail inflation, it helps employees maintain their purchasing power despite rising costs.