The Central Government increases the Dearness Allowance (DA) and Dearness Relief (DR) for central employees and pensioners two times every year, in January and July. This increase depends on the All India Consumer Price Index (AICPI) numbers, which are released for two time periods — January to June and July to December.

For those under the 7th Pay Commission, DA was increased by 2% from January 2025. The announcement was made in March. After this, DA went up from 53% to 55%. Now, from July 2025, the DA rates are going to change again based on the January to June data. The government may announce this increase after Rakshabandhan.

January to May AICPI Data Released

The data from January to May 2025 of the AICPI (All India Consumer Price Index) has been released. This data helps to decide how much the Dearness Allowance (DA) will increase in July.

Here are the AICPI-IW numbers so far:

  • January 2025 – 143.2
  • February – 142.8
  • March – 143.0
  • April – 143.5
  • May – 144.0 (increased by 0.5 points)

After these five months, the current DA score stands at 57.85%, which hints at a 3% increase in DA. But the June 2025 data is still awaited. It will be released on 30 or 31 July 2025, after which the final DA hike from July will be confirmed.

DA May Increase by 3% or 4%

Looking at the current score of 144.0, the DA is very close to 58%. So, a 3% increase in DA is almost certain. This means that from July 2025, DA may increase from 55% to 58%.

Even if the June index drops slightly, the 3% hike is almost confirmed. The government may announce the new DA rates in the Modi cabinet meeting, expected around Rakshabandhan or Diwali. Along with the hike, arrears for past months will also be given.

How is Dearness Allowance Calculated?

The Dearness Allowance for central government employees and pensioners is calculated using a fixed formula under the 7th Pay Commission:

DA% = [{12-month average of AICPI-IW (base 2001=100) – 261.42} ÷ 261.42] × 100

For example:

Average AICPI-IW of last 12 months = 392.83

Formula: (392.83 – 261.42) ÷ 261.42 × 100 = 50.26%

So, as per the formula, DA becomes 50.28% of the basic salary. The central government may round it off and increase DA up to 50% officially.