Big news is coming for central government employees. Right now, employees are waiting for the 8th Pay Commission. But before that, the increase in dearness allowance (DA) under the 7th Pay Commission is near. Central government employees and pensioners were waiting for this. Every year, DA and DR increase in January and July. This time, a 3% DA hike was expected. Now that has been confirmed.
- The DA of central government employees can reach 58 percent. DA-DR becomes effective from January 1 and July 1 every year.
- The DA-DR for central government employees and pensioners was approved in the Union Cabinet meeting on October 1, 2025.
- The exact DA-DR amount is calculated based on the CPI-IW formula. This report is given to the Union Ministry of Labour.
How is DA calculated under the 7th Pay Commission?
Average DA for 12 months (%) = [(12 months average CPI-IW – 261.42) ÷ 261.42] × 100.
Here, 261.42 is the CPI-IW for 2016.
The full average CPI-IW till May 2025 is not yet available. But agriculture and farming show a downward impact. For example:
- CPI-AL: 2.84%
- CPI-RL: 2.97%
These numbers are not directly used to fix DA, but they show the trend.
If CPI-IW remains stable till June or increases slightly, then DA may rise by 3 percent. That means DA will increase from 55 percent to 58 percent.
After reviewing the CPI-IW average, the Union Cabinet approved the DA hike. This new DA-DR will be effective from July 1, 2025.
If DA rises by 3 percent, employees with a basic pay of ₹18,000 will get ₹540 more per month.
For example, with a basic salary of ₹18,000, the current annual DA is ₹9,900. After a 3 percent hike, it will be ₹10,440. This brings good news for central government employees and pensioners during Mahanavami.
At the same time, employees are also waiting to know when the 8th Pay Commission will be implemented.