10 years of 7th Pay Commission: How Dearness Allowance (DA) increased from 2% of Basic Pay to 55%

The Union Cabinet on Friday (March 28, 2025) decided to increase the Dearness Allowance (DA) and Dearness Relief (DR) rate for Central Government employees and pensioners by 2%.

Currently, the dearness allowance rate is decided as per the recommendation of the 7th Pay Commission, whose 10-year tenure is ending this year.

Employees who have been in service for more than 10 years may recall Friday’s 2% hike as something familiar.

The first hike in the DA rate was announced in November 2016. And the rate was fixed at 2% of Basic Pay. Interestingly, the last hike in DA rate before the 8th CPC setup is also by 2%.

However, in these 10 years, the total DA rate as a percentage of the Basic Pay has increased from 2% in 2016 to 55% now.

During this period, the rate of DA/DR was increased by 2% on four occasions before 2025:

• First, the DA rate was increased from 2% to 4% with effect from January 1, 2027.

• Second, DA rate was increased from 5% to 7% with effect from January 1, 2018.

• Third, DA rate was increased from 7% to 9% with effect from July 1, 2018.

• Fourth, DA rate was increased from 5% to 7% with effect from January 1, 2018.

The maximum hike in DA rate was seen during the COVID-19 years, when it was increased by 14%, from 17% of Basic Pay to 31% with effect from July 1, 2021.

The DA/DR hike announced on Friday will be applicable from January 1, 2025.

How will the current DA hike translate into pay?

This can be understood with an example. Suppose an employee's basic pay is ₹50,000. At 53%, he was getting ₹26,500 as DA. At 55%, he will get ₹27,500 as DA. This means he will get ₹1000 extra (₹27,500-₹26,500) due to the DA hike.