The Dearness Allowance (DA) for all central government employees has been hiked by 3%, bringing it to 53% of the basic pay, compared to 50% earlier. This comes just ahead of Diwali celebrations after a significant delay in its announcement.

Dearness allowance refers to the adjustment of the pay to keep up with inflation and rising living costs, calculated on the basis of the All India Consumer Price Index (AICPI).

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The central government hikes the DA two times a year in January and July, with announcements made around Holi in March and around Diwali in September, with the arrears of the hike paid off henceforth.

For this year specifically, the DA hike for July got significantly delayed, with the announcement originally being expected before the Haryana elections held on October 5.

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Because of this, the Confederation of Central Government Employees and Workers wrote to Finance Minister Nirmala Sitharaman, drawing attention to it.

Similar to DA, the dearness relief (DR) will also be hiked accordingly. DR is the same pay adjustment, but for pensioners.

As it comes just around the festive season, the DA hike may also provide a boost to consumer spending.

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