There is good news for more than 1 crore central government employees and pensioners. The Dearness Allowance (DA) for government employees may be announced around Diwali. According to our partner Financial Express, DA may increase by 3%. This will raise DA from the current 55% to 58%.

DA is revised twice a year based on the inflation data of the last 12 months and a formula-based calculation. As per Labour Bureau data, the All India CPI-IW for June 2025 increased by 1 point to 145. In January 2025, the government increased DA by only 2%, from 53% to 55%. At that time, many employees were disappointed as they had expected a bigger hike.

June CPI-IW Data Out; DA Hike May Be 3%

The Labour Bureau has released the All India Consumer Price Index (CPI-IW) for industrial workers for June 2025, which is 145. The average index for the 12 months from July 2024 to June 2025 is 143.6.

How DA is Calculated

Under the 7th Pay Commission, DA is calculated using this formula: DA (%) = [(CPI-IW average × 2.88) – 261.42] ÷ 261.42 × 100. If we use the average of 143.6 in this formula, the result is 58.2%. As per government rules, the decimal is removed, so DA becomes 58%. This means DA may increase by 3% from the current 55%.

Increase More Than Last Time

In January 2025, DA increased by 2%, making it 55%. Now, with a 3% hike from July 2025, it will be 58%. This will give employees and pensioners extra money during the festive season.

The new DA will be effective from July 1, 2025, but the government usually announces it in September or October before festivals. This time also, the announcement is expected around Diwali.

This July–December 2025 hike will be the last under the 7th Pay Commission, which ends on December 31, 2025. The 8th Pay Commission was announced in January 2025, but the government has not yet selected its chairman or members. Looking at past records, it usually takes 18 to 24 months to start a new pay commission. This means the 8th Pay Commission may be implemented in 2027. Till then, employees and pensioners will keep getting DA hikes on the current basic pay.