Will central government employees’ dearness allowance reach 60%?

Employees and pensioners of the central government are anticipating a potential 3% increase in Dearness Allowance (DA) and Dearness Relief (DR), which would take effect from July 2025.

Nevertheless, this announcement is typically not issued in July. It is typically announced during the holiday period, specifically in September or October. However, the advantage is determined starting from July.

The government updates the DA/DR rates biannually, effective January 1 and July 1. Nonetheless, the formal declaration typically arrives a few months afterward. For example, a increase effective from January is typically revealed in March, whereas the increase scheduled for July is announced in September or October. The DA announcement for July 2025 is anticipated to adhere to a similar trend.

Should the existing data result in a 3% rise, the overall DA would go from 55% to 58%.

DA is determined using the All-India Consumer Price Index for Industrial Workers (AICPI-IW). In March 2025, the index stood at 143 and climbed to 144 by May. Should this trend persist, the likelihood of a 3% increase grows stronger.

Following the introduction of the 7th Pay Commission, DA rates have consistently increased. In 2016, DA stood at 0%, and by January 2025, it increased to 55%. With a probable 3% increase in July, the number might rise to 58%. Following the upcoming review in January 2026, if a further 2% increase occurs, DA could reach 60%.

The suggested 8th Pay Commission, likely to be initiated in January 2026, might combine the accumulated DA, potentially reaching 60%, with the basic salary. This is a common practice in pay commissions, where the salary framework is updated, and the DA calculation begins anew from zero.