Dearness Allowance hike: Central Govt employees’ DA could jump to 60% of Basic Pay in 2026; here’s why
Thank you for reading this post, don't forget to subscribe!The Central Government is expected to announce up to 3% hike in dearaness allowance (DA) and dearness relief (DR) for its employees and pensioners respectively with effect from July 1, 2025. However, the announcement of DA hike may not happen in the month of July itself.
The Government announces revised DA/DR rates twice a year effectively from January 1 and July 1 as per the recommendation of the 7th pay commission.
However, the announcement of the DA hike is typically done around the festival season. For instance, in March for DA hike with effect from January 1 and in September-October for DA hike with effect from July 1, 2025. This means, employees and pensioners need to wait beyond July for DA/DR hike announcement.
Irrespective of the timing of DA/DR hike announcement for July-December 2025, the overall DA rate will jump to 58% of Basic Pay if the Government approves a 3% hike based on the recent inflation data.
How has DA increased till now?
Since the implementation of the 7th Pay Commission in 2016, the DA rate increased from 0% to 55% of Basic Pay as follows:
| Effective Date | DA (%) |
|---|---|
| 1st Jan 2025 | 55% |
| 1st July 2024 | 53% |
| 1st Jan 2024 | 50% |
| 1st July 2023 | 46% |
| 1st Jan 2023 | 42% |
| 1st July 2022 | 38% |
| 1st Jan 2022 | 34% |
| 1st July 2021 | 31% |
| 1st July 2019 | 17% |
| 1st Jan 2019 | 12% |
| 1st July 2018 | 9% |
| 1st Jan 2018 | 7% |
| 1st July 2017 | 5% |
| 1st Jan 2017 | 4% |
| 1st July 2016 | 2% |
| 1st Jan 2016 | – |
With effect from July 2025, central government employees may expect up to 3% hike in DA, which will raise the total DA rate from 55% to 58% of Basic Pay.
The increase in DA is projected based on the rising AICPI-IW which climbed from 143 in March 2025 to 144 in May 2025. If the index continues to increase and breaches the 144-mark, then it would translate into a DA rate of approximately 58%.
After July, the next DA hike would be expected from January 1, 2026. So if the DA reaches 58% from July and there is another hike of even 2% from January then the overall DA will reach 60% of Basic Pay.
Please note this projection may or may not come true as the final decision in respect of DA/DR hike is in the hands of the government.
What will 8th CPC do?
The 8th Pay Commission, which is expected to be implemented from January 1, 2026, may take at least 60% DA/DR into account while calculating pay revisions.
Most likely, the 60% DA will be merged with the Base Salary for revised calculations.
Merging past DA/DR is a standard practice during pay commission revisions. This also resets the DA cycle.
