7th Pay Commission- Big news for central government employees. Keeping inflation in mind, the Central Government revises the rates of dearness allowance/dearness relief of Central Government employees and pensioners twice every year in January and July, which depends on the half-yearly data of the All India Consumer Price Index. These figures are released by the Ministry of Labour between January to June and July to December.
From January 2025, DA of employees and pensioners coming under the 7th Pay Commission was increased by 2%, which was announced in March 2025, after which DA has increased from 53% to 55% and now from July 2025, the rates of DA are to change again which will depend on the half-yearly data from January to June. It is likely to be announced after Rakshabandhan.
What are the numbers pointing towards so far
If we look at the data of AICPI index so far, AICPI INDEX was 143.2 in January 2025, AICPI-IW 142.8 in February, 143.0 in March, 143.5 in April and reached 144.0 with an increase of 0.5 points in May, making the DA score 57.85%, which is indicating towards 3%. However, June figures are yet to come, which will be released on 30-31 July 2025, which will make it clear how much DA will increase from July 2025.
Dearness allowance may increase by 3 percent
If there is an increase of 0.5 points in June 2025, then DA can increase up to 4%. Otherwise 3% is considered certain. After this, DA can increase from 55% to 58 or 59%. It is expected to be announced around Diwali (October-November), because by the end of July, the data of AICPI IW index from January to June will come.
After this, the Labor Bureau will complete its file and send it to the Finance Ministry, from where the proposal will be sent for approval in the cabinet meeting. As soon as the green signal is received from here, orders will be issued by the Finance Ministry and benefits will start being received. The new rates will be applicable from July 2025, in such a situation, arrears of July, August and September are also expected to be received.
DA Calculation Formula
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 be applicable to those central government employees and pensioners who get salary based on the recommendations of the Seventh Pay Commission. DA%= (392.83-261.42)/261.42×100 = 50.26
The average CPI-IW for the last 12 months is 392.83. According to the formula, DA is coming to 50.28% of the basic salary. Therefore, the central government can increase the dearness allowance by up to 50% (ignoring decimal points).