Central Government employees and pensioners can likely expect a 3% hike in their Dearness Allowance (DA) and Dearness Relief (DR), effective from July 1, 2025. This increase would raise the DA/DR rate to 58% of their basic salary and pension, respectively.
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The main reason for this anticipated increase is the rising All India Consumer Price Index for Industrial Workers (AICPI-IW). This index is a key metric used to calculate DA/DR hikes. According to the Labour Bureau, the AICPI-IW rose to 145 in June 2025, marking the fourth consecutive month of increase.
Here’s a snapshot of the index data for May and June 2025:
| Groups | May 2025 | June 2025 |
| Food & Beverages | 146.9 | 148.6 |
| Pan, Supari, Tobacco & Intoxicants | 166.6 | 167.4 |
| Clothing & Footwear | 151.0 | 152.0 |
| Housing | 134.6 | 134.6 |
| Fuel & Light | 153.6 | 153.5 |
| Miscellaneous | 141.4 | 142.0 |
| General Index | 144.0 | 145.0 |
What’s Next?
While the increase is expected, the government still needs to make an official announcement. This is typically done during the festival season, so employees and pensioners can likely look for a decision sometime in September or October 2025.
This may also be the final DA/DR increase before the 8th Central Pay Commission begins its work.
