The first morning of 2026 has brought a silver lining for central government employees and pensioners. Amidst the buzz surrounding the 8th Pay Commission, indications of a massive 60% increase in dearness allowance (DA) have become increasingly strong. The AICPI-IW data for November 2025, released by the Labor Bureau, clearly indicates that the final dearness allowance under the 7th Pay Commission is now poised to see a massive 2% increase.
60% DA is now just a step away
The calculation of dearness allowance payable from January 2026 is now in its final stages. According to the Labor Bureau report, the All India Consumer Price Index (AICPI-IW) reached 148.2 points in November 2025. This represents a significant increase of 0.5 points compared to October. With this significant increase, the expected DA from January 2026 has reached 59.94%.
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Given the current trend, it is almost certain that dearness allowance will cross the magical mark of 60% by the time the December data is released. However, the government will only make an official announcement after the full December 2025 data is available. This Labor Bureau report shows that while the pace of inflation has slowed slightly in the past few months, the index’s steady upward trend continues.
AICPI-IW data from July to November
If we look at the data for the past six months, there has been a steady improvement in dearness allowance. In July 2025, when the AICPI index was at 146.5, the estimated DA was 58.52%. It then rose to 58.94% in August and 59.31% in September. A slight increase in October reached 59.60%, and now November’s 148.2 points have placed it at a solid 59.94%. Only the formality of December’s data remains, after which the 60% mark will be firmly established.
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Why is the January 2026 DA most significant
The January 2026 dearness allowance is not just a routine update, but a strong link to the implementation of the 8th Pay Commission. Experts believe that this could be the final DA installment under the 7th Pay Commission. As soon as the recommendations of the 8th Pay Commission are implemented, the current dearness allowance will be seamlessly merged with the basic salary. DA calculations will then start from zero (0%) based on the new pay structure. Therefore, the January 2026 revision will prove to be a major transition point for employees.
Impact on Salary and Pension
Dearness allowance is directly linked to employees’ salaries and pensioners’ monthly pensions. Let’s use a simple example to understand how much extra money will come into your pocket with 60% DA. Suppose a central government employee’s basic salary is ₹50,000, then at 58%, they would receive ₹29,000 dearness allowance.
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Now, at 60%, this amount will increase to ₹30,000. This means a substantial benefit of ₹1,000 to ₹1,500 per month. Similarly, pensioners will see a substantial increase in their monthly pension, on average, ranging from ₹700 to ₹1,200. This increase will provide significant support to employees’ household budgets in times of rising inflation.