DA Fitment Factor – The continuous increase in inflation and the lack of growth in salary accordingly can spoil the household budget. To overcome this crisis, the government gives such allowance to the employees, which gives them financial strength. This allowance is called dearness allowance and it is increased twice a year.

The meaning of mentioning dearness allowance here is also important because the new pay commission is likely to be implemented from January 2026. This will be the 8th pay commission. Now the question arises that what does dearness allowance have to do with the pay commission?

According to experts, Dearness Allowance in salary is considered a protective shield. The recently released All India Consumer Price Index for Industrial Workers (AICPI) data for July 2025 has proved to strengthen this shield further. The index has jumped by 1.5 points to 146.5. This will not only be important in deciding the rate of the next DA but will also form the basis for determining the minimum wage and fitment factor under the 8th Pay Commission.

Just as in 2016, the 7th Pay Commission implemented a fitment factor of 2.57 by making 125% DA as the base, the current figures are going to become a part of the formula for the new salary of employees in 2026. HS Tiwari, General Secretary of the All India Accounts Committee, says that the latest figures of AICPI-IW are going to boost the morale of central employees as it will have a direct impact on the calculation of basic pay and fitment factor in the 8th Pay Commission.

What is AICPI-IW and how will it do good?

AICPI-IW data is currently used to determine dearness allowance and dearness relief. Both these benefits are given to central employees and pensioners respectively. Dearness allowance is an important part of the salary of employees, which balances the pressure of inflation. Tiwari explains that whenever a new pay commission is implemented, the DA rates applicable at that time play an important role in determining the basic pay and fitment factor. The higher the AICPI-IW index, the higher the DA and the basic pay is also likely to increase in the same proportion.

2.57 fitment factor was fixed by combining basic pay and DA

According to Tiwari, if we look at the recommendations of the 7th Pay Commission, the Commission had clearly said that on January 1, 2016, a fitment factor of 2.57 was fixed by combining the existing basic pay and DA of the employees. Of this, 2.25 was made up of basic pay and 125 percent DA, while the remaining 0.32 was the increase in actual salary. Thus the total increase was about 14.2 percent.

According to the Labor Bureau, the AICPI-IW index has increased by 1.5 points to 146.5 in July 2025. This data will play a decisive role in deciding the new DA to be implemented from January 2026. This DA rate will further become the basis for deciding the fitment factor and basic pay in the recommendations of the 8th Pay Commission.

Tiwari said, however, it is important to note that as soon as the 8th Pay Commission is implemented, the DA rates are reset to zero. Despite this, when the Commission decides the new minimum wage and fitment factor, it is certain that the existing DA figures will be taken as the basis. At present, the government has not yet announced the terms of reference of the 8th Pay Commission and the appointment of its chairman. Due to this delay, the final report and recommendations of the Commission may take time to come.