The Prime Minister Narendra Modi-led Central government will likely increase the Dearness Allowance (DA) for its employees from July 2025, according to data based on recent inflation. Currently, they are getting 55% DA; after this increase, it will reach 59%. The DA hike will be effective from July 2025, however, the official notification for the increase is likely to be made in August this year or in Diwali 2025.
The All India Consumer Price Index for Industrial Workers (AICPI-IW) rose by 0.5 points in May 2025 to 144. The index has shown an increase over the past three months: it was 143 in March, 143.5 in April, and now stands at 144 for May.
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If the ICPI-IW continues this trend and rises to 144.5 in June, the 12-month average of the AICPI-IW is expected to reach around 144.17. Adjusting the 7th Pay Commission’s formula will translate into a DA rate of approximately 58.85%. Rounded off, the government could approve a 59% DA from July 2025. DA is revised twice a year in January and July. It is based on the average of AICPI-IW data over the past 12 months.
Formula to Calculate DA
DA (%) = [(Average CPI-IW for past 12 months – 261.42) 261.42] 100
Here, 261.42 is the base value for calculation. Using this method, the expected hike is currently estimated at 4%.
The DA revisions announcement will be made in September or October during the festival season of Diwali 2025. This will be the final DA hike under the 7th Pay Commission, whose term ends on 31 December 2025. The 8th Pay Commission was announced earlier this year in January, but there has been no further progress.
When Will the 8th Pay Commission to be Implemented?
As per previous trends, a new pay commission usually takes about 18 to 24 months to submit its report and implement it. If the same timeline is followed, the recommendations of the 8th Pay Commission are likely to come into effect only by 2027. This means central government employees will continue to receive payment under the 7th Pay Commission.