Big update is here regarding DA hike under 7th Pay Commission. The central government is expected to announce a rise in dearness allowance (DA) and dearness relief (DR) next week. This move will benefit over 1.2 crore government workers and pensioners. Reports suggest that the official announcement might come before Holi.
The government typically revises DA every January and July, but the official word usually comes a bit later. Generally, the January increase is revealed before Holi, while the July adjustment is announced around Diwali. This allowance helps employees maintain their purchasing power against inflation.
What’s the expected increase this time?
The DA might go up by 3% based on December 2024 data, bringing the total to 56%. However, this will ultimately need the Union Cabinet’s approval, led by the Prime Minister.
How is DA calculated?
Dearness Allowance is determined using the All India Consumer Price Index for Industrial Workers (AICPI-IW).
DA calculation for central employees:
DA (%) = [(Average AICPI of last 12 months – 115.76) / 115.76] × 100
DA calculation for public sector employees:
DA (%) = [(Average AICPI of last 3 months – 126.33) / 126.33] × 100
A glance at the last DA increase:
In March 2024, the government raised the DA from 46% to 50%. This was announced on March 7, 2024, providing some relief to employees just before Holi.
In October 2024, the government bumped up the DA by another 3%, bringing it to a total of 53%. This change took effect on July 1, 2024.
Looking ahead to the 8th Pay Commission and future DA increases, it seems like the recommendations will roll out in 2026. We’ll have to wait and see if the DA gets merged into the basic salary. The final decisions on the 8th Pay Commission could be wrapped up by the end of the 2025-26 financial year, with implementation set for the following year. Meanwhile, under the 7th Pay Commission, we can expect two DA hikes in 2025 and one more in 2026.