DA Hike: Amid rising inflation, there is good news for Central Employees and Pensioners. The Central Government revises the rates of Dearness Allowance (DA) and Dearness Relief (DR) twice a year, around Holi and Diwali. This year, there was a 2 percent increase in DA from January 2025, which was announced in March. Now the next DA is set to increase from July 2025, and it is expected that it will be announced after Rakshabandhan. This increase will directly affect your pocket, which will increase your monthly income.
How much will your DA increase
The new rates of DA are based on the AICPI data from January to June released by the Ministry of Labor. (All India Consumer Price Index) data. Looking at the AICPI Index data so far, DA is likely to increase by 2 to 3 percent. However, the data for May and June is yet to come. The May data is expected to be released today, June 30, which will give a big indication of how much the dearness allowance will increase from July 2025.
What the AICPI data from January to April
How much the dearness allowance will increase in July will depend on the half-yearly (January to June) data of the AICPI index. Let’s see the data from January to April:
January 2025:- AICPI Index 143.2
February 2025:- AICPI-IW (AICPI-IW) 142.8
March 2025:- AICPI Index 143.0
April 2025:- AICPI Index 143.5 (with an increase of 0.5 points)
According to these figures, the DA score is 57.95%, which is pointing towards an increase of 2 to 3 percent. The figures for May and June will be released by 30 June and 31 July 2025 respectively, only after which it will be clear how much exact DA will increase from July 2025.
Will DA increase by 2% or 3%?
If there is an increase in the May-June figures, then a 3% increase in DA in July (from 55% to 58%) is considered certain. If there is a decline, like in January, the DA may increase by up to 2% (from 55% to 57%). However, the percentage increase in DA in July is yet to be officially confirmed.
If DA increases by 2% or 3%
If there is a 2% increase:- Those getting a basic salary of Rs 18,000 will get a benefit of ₹ 10,260.
If there is a 3% increase:- Those getting a basic salary of Rs 18,000 will get a benefit of ₹ 10,440.
The new rates will be applicable from July 2025, which is expected to be announced in the Modi Cabinet meeting around Diwali. In such a situation, arrears are sure to be received, which will be an additional financial benefit for employees and pensioners.
How is Dearness Allowance calculated
There is a fixed formula for calculating the Dearness Allowance of Central Government employees and pensioners. This formula applies to Central Government employees and pensioners who receive salary based on the recommendations of the 7th Pay Commission:
7th CPC. DA% = [{(12-month average of AICPI-IW of last 12 months (base year 2001=100) – 261.42} / 261.42] × 100
For example:
The average CPI-IW of the last 12 months is 392.83.
As per the formula, DA is coming to 50.28 percent of the basic pay.
Therefore, the central government can increase the dearness allowance by up to 50% (ignoring decimal points). This calculation gives the government a clear indication of the expected increase in DA.