DA Hike: During the budget session, millions of central government employees nationwide have received some really good news. While everyone is keeping an eye on the government’s economic strategies, a significant update has come through regarding the dearness allowance (DA). This news has a direct effect on the finances of government employees and pensioners. In fact, the way is now completely clear for a dearness allowance increase set for January 2026. The government has shared the essential data that will influence the anticipated salary hike.
DA Hike Update
Dearness allowance hikes aren’t just random; they’re based on solid statistics. The key metric for this is the All India Consumer Price Index for Industrial Workers (AICPI-IW). The Ministry of Labor and Employment has published these numbers for December 2025.
According to the ministry, the index held steady at 148.2 points in December. It’s interesting to note that this figure was the same in November too. Just because the index is stable doesn’t mean that dearness allowance hikes will come to a halt. Experts suggest that with these numbers, the government is poised to implement the maximum possible increase in DA, which would be a fantastic boost for employees.
There will be a significant salary increase; could DA reach 63%?
Based on the current data, it’s estimated that the central government might raise the dearness allowance by as much as 5 percent. If this occurs, the total dearness allowance for central government employees could rise to 63 percent.
Manjeet Singh Patel, President of the All India NPS Employees Federation, weighed in on this. He pointed out that the AICPI-IW index staying at 148.2 is a good sign. This indicates that there is ample opportunity for a 5% increase in dearness allowance. Therefore, employees can now look forward to a dearness allowance rate of 63%.
When will the new rates be applicable?
The central government revises dearness allowance (DA) twice a year, in January and July. This revision is part of a biennial cycle. The latest update is for January 2026. You may recall that in July 2025, the government previously increased DA from 55% to 58%. With this new increase, which will come into effect in January, employees will benefit from increased salaries, which will prove to be a significant support in combating rising inflation.
How is this mathematics decided?
There is a set formula for this, which is based on the Consumer Price Index for Industrial Workers. The DA percentage is calculated by assessing the average AICPI-IW for the last 12 months. This data is the key to determining the amount of relief provided to employees from the government treasury. This formula is used to calculate the DA hike:
DA (%) = [{(average AICPI-IW for the last 12 months × 2.88) − 261.41} / 261.41] × 100 − current DA (%)