Central government employees are likely to see another increase in their dearness allowance (DA) under the 7th Pay Commission, with the hike expected to take effect from July 2025. Based on current inflation trends and media estimates, the next DA hike could be in the range of 3% to 4%, although the government has not officially announced it yet.
Currently, the DA rate stands at 55%, after the last revision in March raised it by 2%. DA is a key component of salaries, helping employees offset the impact of rising prices, while pensioners receive a similar benefit called dearness relief (DR).
When and how is DA revised?
The government revises DA twice a year:
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February–March, with effect from January 1
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September–October, with effect from July 1
Although the hike becomes applicable from July, the formal announcement usually comes later in September or October. Employees then receive arrears for July, August, and September.
DA is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which is released monthly by the Labour Bureau. The government averages the CPI-IW over 12 months and applies the following formula:
DA (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100
(Base year: 2016)
Inflation trends and expected hike
According to the labour ministry, inflation for rural and agricultural workers dipped below 3% in May 2025, down from over 3.5% in April. While these rural indices don’t directly determine DA, they indicate price trends that influence the CPI-IW. If this trend holds, analysts expect a 3% to 4% DA hike, which could raise the rate to around 58% or 59%.
What it means for salaries
If the government approves a 3% DA hike, an entry-level central government employee with a basic pay of ₹18,000 per month could see an increase of about ₹540 per month. Higher basic pay brackets would see proportionally larger increases.
The announcement is expected later this year after the government reviews CPI-IW data and finalizes the hike.
