Amid rising prices and no big salary increase, the biggest support for employees is Dearness Allowance (DA). The central government revises DA every six months so that salaries remain balanced with market prices. Now this allowance is not only giving relief but may also become the base of the 8th Pay Commission, which can start in 2026. The latest AICPI-IW (All India Consumer Price Index for Industrial Workers) data for July 2025 shows important signs of this.
What is the matter?
The government fixes the DA rate on the basis of AICPI-IW data every six months. In July 2025, the index increased by 1.5 points to 146.5. This can become the base for the next DA hike and also for the 8th Pay Commission formula.
Financial expert HS Tiwari says that this number not only shows a DA increase, but it can also decide the fitment factor and minimum wages, like it was done in the 7th Pay Commission in 2016.
What is the fitment factor, and why is it important?
The fitment factor is a number by which your basic salary is multiplied to decide the new salary. In the 7th Pay Commission, it was 2.57. This gave about 14.2% rise in total salary (basic pay + DA). If DA rates go higher with the AICPI-IW index in the 8th Pay Commission, the fitment factor can also rise, which means a bigger increase in basic salary.
AICPI-IW and the government’s plan
The July 2025 index is 146.5. This will decide the DA from January 2026 and also help set the new fitment factor and minimum wage. When the new Pay Commission starts, DA is reset to 0%, but this data is the base of the new formula. Right now, the government has not announced the ‘Terms of Reference’ or chairman of the 8th Pay Commission. Still, the Finance Ministry and Labor Bureau are working on it secretly.