Tamil Nadu Chief Minister M.K. Stalin on Thursday announced a hike of 3% in Dearness Allowance (DA) for statehood government employees, from 55% to 58%, according to a report by NDTV.
The increase would benefit about 16 lakh staff, teachers and pensioners. Though the move would entail an additional annual expenditure of Rs 1,829 crore, the government has taken up the financial burden considering the welfare of state employees.
This decision is often made in alignment with the hike announced by the Central government for its employees.
The hike increases the Dearness Allowance, which is a crucial component of the salary designed to compensate employees for the rising cost of living due to inflation. This latest announcement brings the revised DA rate to a new percentage of the basic pay.
In a Diwali bonanza to central government employees and pensioners, the Union Cabinet decided to increase Dearness Allowance (DA)/ Dearness Relief (DR) by 3% envisaging an annual outlay of Rs 10,083.96 crore.
The hike in DA and DR comes days after the rationalisation of GST rates, bringing down prices of mass consumption items like ghee, paneer, butter, 'namkeen', ketchup, jam, dry fruits, coffee and ice creams, and aspirational goods like TV, AC, and washing machines, which became cheaper.
The DA/DR increase of 3% over the existing rate of 55% of the basic pay/pension to compensate against the price rise is effective July 1, 2025.
This will benefit about 49.19 lakh central government employees and 68.72 lakh pensioners.
The combined impact on the exchequer on account of an increase in DA and DR will be Rs 10,083.96 crore per annum, I&B Minister Ashwini Vaishnaw said while briefing on decisions taken in the Cabinet meeting.
The increase is in accordance with the accepted formula based on the recommendations of the 7th Central Pay Commission.
Centre revises DA/DR twice a year. The last revision, announced in March, was effective from January 1. Union Cabinet last month had approved a performance-linked bonus for railway employees.
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