DA Hike: Central government employees might be in for a nice surprise soon. A potential 3% boost in dearness allowance (DA) could be on the way. If this goes through, around 50.14 lakh central government employees and 69 lakh pensioners nationwide will see an increase in their salaries and pensions.
The All India Consumer Price Index-Industrial Workers (AICPI-IW) data from June 2026 indicates a 3% rise in dearness allowance for central government employees. However, the government hasn’t made any official announcement yet.
DA hike for central employees
It’s important to remember that the government announces an increase in dearness allowance for its employees twice a year. These hikes take effect in January and July. The dearness allowance is determined based on AICPI-IW data. The AICPI-IW index, published by the Ministry of Finance’s Labor Bureau in June 2026, hit 151.9. The average over the last 12 months, from July 2025 to June 2026, stands at 148.65. This results in a dearness allowance of about 63.76%.
How is DA calculated?
The dearness allowance is figured out using the average of the AICPI-IW for the previous 12 months, following a specific formula. A factor of 2.88 is used to adjust the base year from 2016 to 2001. The formula for calculating the dearness allowance for central government employees is = [(Average of AICPI for the past 12 months (base year 2001 = 100) – 261.42) / 261.42] x 100.
If DA goes up by 3%, how much will salaries rise?
If the government confirms a 3% DA increase, the dearness allowance for central employees will jump from 60% to 63%. For instance, if an employee’s basic salary is Rs 30,000, the salary increase would look like this:
Basic Salary Rs 30000
Current DA at 60% Rs 18000
Current DA at 63% Rs 18900
This means a monthly salary increase of Rs 900. On an annual basis, this increase will be Rs 900 * 12 = Rs 10,800. This means that the higher your basic salary, the greater the benefit of the dearness allowance increase. Why is DA paid? To combat inflation, the central government provides dearness allowance to its employees and pensioners. This allowance is paid over and above the basic salary. It is reviewed every six months. This means that employees’ salaries can be increased twice a year through dearness allowance.