The central government is expected to announce a 3–4% DA hike for its employees and pensioners ahead of the upcoming festive season.
The move, anticipated to be formalized in the second week of October, will benefit more than 1.2 crore individuals across the country.
The hike will be implemented retrospectively from July 1, 2025, and arrears for July, August, and September are likely to be disbursed with the October salary or pension.
Currently, central government employees receive DA at 55% of their basic pay.
If the government approves a 3% hike, it will revise the DA to 58%, providing a modest but timely increase in monthly income.
This adjustment will help employees and retirees manage rising costs during Dussehra and Diwali.
DA Hike Based on Inflation Trends and CPI-IW Formula
The DA hike is not arbitrary. The government calculates it using a fixed formula under the 7th Pay Commission, which links the allowance directly to inflation.
The formula is based on the Consumer Price Index for Industrial Workers (CPI-IW), compiled monthly by the Labour Bureau.
The base year for this calculation is 2016, with the reference index set at 261.42.
The government averages CPI-IW data over the preceding 12 months to determine the percentage increase.
This ensures that DA revisions reflect actual cost-of-living changes and offer financial protection against inflation.
Analysts have noted a cooling inflation trend in recent months, which supports the expectation of a 3–4% hike for the July–December cycle.
Impact on Salaries and Pensions
The DA hike will directly increase monthly earnings for central government employees and pensioners.
For example, an entry-level employee with a basic salary of ₹18,000 currently receives ₹9,900 as DA.
A 3% hike would raise this to ₹10,440, adding ₹540 per month. For those with higher basic pay, the increase will be proportionally larger.
The government will also provide pensioners with a corresponding rise in Dearness Relief (DR), as it links DR to DA.
This adjustment helps maintain purchasing power and provides a cushion against inflation, especially for retirees on fixed incomes.
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