The month of July has started, and more than 1 crore Central Employees and Pensioners of the country are now eagerly waiting for the Dearness Allowance (DA) hike in the festival season. From the data of the All India Consumer Price Index (AICPI) released by the Ministry of Labor, it is estimated that this time there can be a great hike of 3 to 4 percent in DA from July 2025.
If this happens, then your DA can increase from 55% to 58% or 59%. However, the June figures are yet to come, which will be released on 30-31 July, only after which it will be completely clear what percentage the dearness allowance will increase from July 2025. But the good news is that more money is sure to come into your pocket.
Dearness Allowance increases twice a year
Given inflation, the Central Government revises the rates of Dearness Allowance/Dearness Relief of central employees and pensioners twice every year. This happens in January and July and depends on the half-yearly data of the All India Consumer Price Index (AICPI). These figures are released between January and June, and from July to December.
The DA of employees and pensioners coming under the 7th Pay Commission was increased by 2% from January 2025, which was announced in March. After this, DA has increased from 53% to 55%. Now the rates of DA are to be changed again from July 2025, which will depend on the half-yearly data from January to June. It is expected that it may be announced around Rakshabandhan.
Dearness allowance may increase by 3 or 4%
With an increase of 0.5 points in May, the score reached 144.0, making the DA score 57.85%, which is pointing to a 3% increase. However, the June figures are yet to come, which will be released on 30-31 July 2025. Only after this will it be completely clear how much DA will increase from July 2025. If there is an increase of 0.5 points in June 2025 as well, then an increase of up to 4% can be seen. Otherwise, an increase of 3% is considered certain.
When will the announcement be made, and when will the money be received
It is likely that it may be announced around Diwali (October-November). This is because by the end of July, the AICPI IW index data from January to June will be available. After this, the Labor Bureau will send its file to the Finance Ministry, from where the proposal will be placed for approval in the Cabinet Meeting. As soon as the green signal is received from there, orders will be issued by the Finance Ministry, and employees will start getting benefits. The new rates will be applicable from July 2025, so arrears are also certain!
Formula for calculating DA
There is a fixed formula for calculating the dearness allowance of central employees and pensioners:
7th CPC DA% = [{12-month average of AICPI-IW (base year 2001=100) of the last 12 months – 261.42}/261.42×100]
This formula will apply to those central employees and pensioners who get a salary based on the recommendations of the 7th Pay Commission. For example, if the average CPI-IW of the last 12 months is 392.83, then as per the formula, DA comes to 50.28 percent of the basic pay. Therefore, the central government can increase the dearness allowance by up to 50% (ignoring decimal points).