Ahead of Holi, Central government employees are expecting positive news regarding a hike in their dearness allowance.
The dearness allowance is expected to go up by 2% following the release of data from the All India Consumer Price Index-Industrial Workers (AICPI-IW).
This index tracks changes in retail prices of goods and services consumed by industrial workers. The data was released by the Labour Bureau in December last year.
Based on the data, the dearness allowance may rise from the current 58% to 60% in the coming month.
However, the official announcement has not yet been made by the Union government. The increased dearness allowance will be effective from January 2026.
The government hikes dearness allowance twice every year, in January and July. Usually, the announcement is made in the month of March, with the new allowance implemented in a retrospective manner.
While the biannual increase in the allowance is not much, the government mostly aligns the announcement with major festivals like Holi and Diwali. However, it is not a certainty.
Last year, the hike in allowance was declared towards the end of March, while Holi was already celebrated on March 14. In contrast, the July hike was announced on October 1, which was almost three weeks ahead of Diwali that year.
According to some reports, the government may announce the hike before Holi, but the official notification may come by April.
Though a marginal increase, dearness allowance is important for government employees as the hike is linked to inflation trends in the country. The allowance helps workers cope with rising prices.
Dearness allowance is calculated based on the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW).
According to some estimates, there are about 3.5 million Central government employees. Their salaries increased at a pace of 6.5% annually between FY16 and FY23. However, the number of employees declined from 3.25 million to 3.17 million during the same period.
