DA Hike: Big news for central government employees. Following the release of the All India Consumer Price Index – Industrial Workers (AICPI-IW) data for June 2026, it is anticipated that the government might raise the Dearness Allowance (DA) by 3% this time around. If this occurs, employees’ DA will rise to 63%. However, the ultimate decision will only be confirmed after an official announcement from the central government.

AICPI-IW data raises hopes

According to the Labor Bureau of the Ministry of Finance, the AICPI-IW index stood at 151.9 in June 2026. This results in a 12-month average from July 2025 to June 2026 of 148.65. Based on this average, the calculation for the dearness allowance comes to 63.76%. Since the government rounds up the DA, it is set at 63%. In January 2026, the government had already increased the DA by 2%. Now, with the June 2026 data, a further 3% increase is anticipated.

How is dearness allowance decided?

The central government calculates employees’ DA based on the average AICPI-IW over the previous 12 months using a fixed formula. During this calculation, a factor of 2.88 is applied to align the base year of 2016 with that of 2001. The dearness allowance is then established based on this information. According to the current calculations, the DA stands at 63.76%, which can be rounded down to 63%.

How much will the salary increase?

If the government approves a 3% increase in DA, employees will see a direct benefit in their monthly salaries. For instance, Level 1 employees with a minimum basic salary of Rs 18,000 will gain an additional DA of Rs 540 per month. Level 10 employees earning a basic salary of Rs 56,100 could see an extra benefit of around Rs 1,683 per month.

If the increased DA is applied retroactively, employees will also receive arrears. Depending on their pay level, the six-month arrears could range from Rs 3,240 to Rs 10,098.

DA will continue till 8th Pay Commission

Central government employees will keep receiving dearness allowance under the 7th Pay Commission rules until the new pay structure of the 8th Pay Commission is put into effect. Therefore, the upcoming DA increase could play a significant role in increasing employees’ income. However, the 63% DA figure is currently an estimate based on the latest AICPI-IW data. Employees will receive the increased dearness allowance only after the Central Government and the Finance Ministry officially announce it. As a result, millions of employees and pensioners are now awaiting the government’s final decision.