In a major relief for lakhs of central government employees, the long-pending demand for the release of 18 months of withheld Dearness Allowance (DA) arrears might soon be addressed. The discussion, which has been active since the COVID-19 lockdown period, has gained momentum once again, and employees are hopeful that the government will make a positive announcement.
What Are DA Arrears and Why Were They Withheld?
Dearness Allowance (DA) is a cost-of-living adjustment allowance provided to government employees and pensioners to offset the impact of inflation. The Indian government revises DA rates twice a year—typically in January and July—based on the All-India Consumer Price Index (AICPI).
During the COVID-19 pandemic, the central government froze the DA hike for 18 months (January 2020 – June 2021) to manage fiscal pressure. These unimplemented hikes now form the long-pending DA arrears.
Employees’ Unions Suggest Payment in Installments
Employee unions have proposed releasing the arrears in three separate installments to reduce financial burden on the exchequer. They argue this approach balances both employee needs and fiscal responsibility.
Current DA Rate and Expected Hike
At present, central employees receive DA at 55%. Based on the latest AICPI index, a 3% hike is expected in July 2025, raising the total to 58%—a welcome change amidst inflationary stress.
DA Merger with Basic Pay and the 8th Pay Commission
The 8th Central Pay Commission is expected to roll out from January 1, 2026. With DA approaching 58%, it may be merged with basic pay. This would restructure salary, enhance pensions, and improve allowance calculations.
Financial Implications for the Government
Releasing arrears could cost thousands of crores, which has made the government cautious. But with post-pandemic recovery and political stability, an announcement could come by late 2025.
Why Is the Issue Still Relevant in 2025?
- DA is a legal entitlement, not a bonus.
- It affects millions of serving and retired staff.
- Unions and opposition parties continue to exert pressure.
- It reflects the government’s credibility and employee morale.
Government’s Stand and What Lies Ahead
Although no official confirmation has been made, media sources suggest internal talks are ongoing. Speculation points to a potential announcement during the festive season (October–November 2025).
