DA Hike: The Central Government revises the rates of dearness allowance and relief of employees and pensioners twice a year. This revision is done in January and July, which is announced around March-April and October-November. The rates of DA depend on the half-yearly (January to June and July to December) data of the AICPI index.
DA has been increased by 2% from January 2025, which was announced in March. Now DA is to be increased from July 2025, which is expected to be announced around Diwali. How much the dearness allowance will increase in July 2025 will depend on the CPI-IW index data from January to June released by the Ministry of Labor. So far, the figures for January, February, March, and April have come out, which indicates that DA will increase from 55% to 57% or 58% from July 2025. However, the figures for May and June are yet to come.
A look at the figures from January to April
The CPI-IW index data from January to June released by the Ministry of Labor will make it clear how much DA will increase in July 2025. If we look at the figures for 4 months, the AICPI INDEX was 143.2 in January 2025, but in February AICPI-IW fell by 0.4 points to 142.8, although in March it returned to 143.0 with a gain of 2 points and now in April it has come to 143.5 with an increase of 0.5 points, making the DA score 57.95% which is indicating towards 2%. The figures for May and June are yet to come, which will be released by 30 June and 31 July, only after this it will be clear how much DA will increase from July 2025.
Will DA be 57% or 58% from July 2025
If there is an increase in the figures for May-June, then DA will increase by 3% in July (from 55% to 58%). If there is a decline, then like in January, DA can increase by up to 2% (from 55% to 57%). However, it is yet to be officially confirmed how much percent DA will increase in July.
For example, if the basic salary of an employee is Rs 18,000, then if DA increases by 2% to 57%, then there will be an increase of Rs 10,260 in salary and Rs 10,440 if DA is 58%. The new rates will be applicable from July 2025, which is expected to be announced around Diwali, in such a situation arrears will also be available.
How is the dearness allowance calculated
There is a formula to calculate the dearness allowance of central government employees and pensioners. The formula is: 7th CPC DA% = [{12-month average of AICPI-IW (base year 2001=100) for the last 12 months – 261.42}/261.42×100]
This formula will apply to central government employees and pensioners who get a salary based on the recommendations of the 7th Pay Commission.
DA%= (392.83-261.42)/261.42×100 = 50.26
The average CPI-IW for 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%.