Big DA hike coming? Central govt workers eye higher increments

Following the latest Dearness Allowance (DA) hike for the January-June 2025 cycle, central government employees and pensioners are now looking forward to the next allowance increase, with the current DA standing at 55%.

DA Hike

The Dearness Allowance (DA) for central government employees and pensioners was last increased by only 2%, the lowest hike in about 78 months. After the recent DA hike for the January-June 2025 cycle, the main allowance now stands at 55%. DA, a cost-of-living adjustment allowance, is revised twice a year for government employees and pensioners to offset the impact of inflation - for the January to June cycle and the July to December cycle. The central government usually announces one hike in March every year and the second in October/November.

Government Employees

Disappointed with the 2% DA hike for the January-June cycle, over 1.2 crore central government employees and pensioners are expecting a higher hike in the main allowance for the July-December cycle, which will be the last DA hike scheduled under the 7th Pay Commission. The 7th Pay Commission will end its tenure on December 31, 2025, paving the way for the implementation of the 8th Pay Commission. However, considering the current progress, it is highly unlikely that the recommendations of the 8th Pay Commission will be implemented from January 2026, as previously anticipated. The CPI-IW data for March 2025 raised hopes for a higher DA hike in the next July review.

Central Government Employees

The year-on-year inflation rate in March stood at 2.95%, slightly higher than in February. Notably, food inflation was under control, which led to a slight increase in the overall CPI-IW. How is the DA hike calculated based on the CPI-IW number? As per the recommendations of the 7th Pay Commission, the DA/DR hike is calculated by taking the 12-month average of the CPI-IW. Recently, the DA was increased to 55% from January 2025. Now, all eyes are on the CPI-IW figures regarding the possible increase in July 2025.

DA Hike for Central Government Employees

According to the Seventh Pay Commission, the Dearness Allowance is calculated using this formula: Percentage increase in pay = [(Average of CPI-IW for the past 12 months) – 261.42] ÷ 261.42 × 100 Here, 261.42 is the base value of the index. This formula determines the Dearness Allowance based on the monthly CPI-IW average. Now, the AICPI-IW data for the next three months is crucial.