New Delhi, May 3 -- Last month the Finance Ministry announced that Dearness Allowance has been increased by 2% for central government employees and pensioners with effect from January. This takes DA as part of Basic Pay from 58% to 60%.

DA is a percentage of an employees' basic salary aimed at supporting households with increased inflation. It is revised twice a year by the All-India Consumer Price Index (AICPI) to match cost-of-living. New announcements generally occur in early March and October, with rollouts in January and July.

Notably, the 2% DA hike is calculated on the 12-month average as per the method prescribed by the AICPI under the 7th Pay Commission. Under this, since 2021, there have been 10 hikes, with the highest being 1...