DA Hike July 2025: Central Employees May Get 4% Dearness Allowance Boost Before Rakshabandhan

Central government employees and pensioners may get good news before Rakshabandhan. They may receive one more DA (Dearness Allowance) under the current Seventh Pay Commission. Looking at the latest inflation numbers, the dearness allowance for central government employees is likely to increase by 3 to 4 percent in July 2025. This will give relief to crores of central government employees across the country.

The government increases DA two times every year — first in February or March, and second in September or October. The increase starts from January and July. This helps government employees fight rising prices.

In March this year, DA was increased by 2%. Now the current DA rate is 55%. DA is given to government employees and DR (Dearness Relief) is given to pensioners.

How is DA Calculated?

DA is calculated using the All India Consumer Price Index for Industrial Workers (AICPI-IW). This index is made from price data collected from 317 markets in 88 cities.

Every month, the Labor Bureau under the Ministry of Labor gives data on price rise. The government checks this data and then decides how much DA to increase.

In March 2025, the AICPI-IW number was 143. It increased to 144 in May. So, the DA may rise by 3% to 4%. The government uses the average CPI-IW of the last 12 months and a formula from the 7th Pay Commission to calculate the new DA.

DA Formula:

Dearness Allowance (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100
Here, 261.42 is the base number used in the 7th Pay Commission.

Inflation Going Down in Rural Areas

The full CPI-IW data for May 2025 is not out yet. But new inflation data shows some trends. As per the Ministry of Labor, inflation for farm workers (CPI-AL) and rural workers (CPI-RL) went down in May. In April, inflation was more than 3.5%, but in May it dropped to 2.84% and 2.97%. The index points also fell slightly to 1305 and 1319.

CPI-AL and CPI-RL are not used directly to fix DA, but they show the bigger inflation picture. If CPI-IW stays stable or goes up a little, the government may raise DA by 3% to 4%. This would take DA to 58% or 59%. The final increase will be clear after the CPI-IW data for June 2025 comes out.