DA Hike News: If you’re a central government employee or pensioner, or someone in your family is, this update is important.
Around 1.25 crore employees and pensioners may be disappointed to learn that the upcoming Dearness Allowance (DA) hike might be less than 2%—or possibly zero.
The government recently increased DA and Dearness Relief (DR) by 2%, taking it to 55%.
This was the lowest increase in 78 months (more than 6 years). And now, due to low inflation in the first quarter of 2025, the next DA hike for July–December 2025 may be even smaller.
Last DA Hike Under 7th Pay Commission
This will also be the last DA revision under the 7th Pay Commission, whose 10-year term ends on 31 December 2025.
The 8th Pay Commission is expected to take over after this. The new commission will make fresh recommendations about central government salaries.
What Is Dearness Allowance (DA)?
DA is a cost-of-living adjustment allowance paid to central and state government employees and pensioners to offset the impact of inflation.
It is revised twice a year—in January and July. In most years, the January hike is announced in March, and the July hike is declared around October or November.
The All India Consumer Price Index for Industrial Workers (AICPI-IW) is used to calculate DA. This index helps ensure that employees maintain their real income despite inflation.
Why Is the DA Hike Likely to Be Lower?
The key reason is the drop in AICPI-IW data in the early months of 2025.
According to the Labour Bureau, the AICPI-IW index fell from 143.2 in January to 142.8 in February 2025—a drop of 0.4 points.
The inflation rate dropped from 4.90% in Feb 2024 to 2.59% in Feb 2025.
Retail inflation (CPI) also hit a 5-year low, falling to 3.34% in March 2025.
If this trend continues in March and April, the average AICPI-IW for the next DA calculation will drop, leading to less than a 2% DA hike, or even no hike at all.
How Is DA Calculated?
DA is based on the average value of AICPI-IW over a 6-month period. If the index goes down, the DA hike also goes down.
If this index keeps falling for the next few months, employees may not get any DA increase in July.
This affects not only their monthly income but also their purchasing power, savings, and overall lifestyle, since DA is a major part of salary and pension.
What’s Next After the 7th Pay Commission?
As the 7th Pay Commission ends in December 2025, employees and pensioners are now looking forward to the formation of the 8th Pay Commission.
There is no official announcement yet, but expectations are high.
Central employees have long been demanding that DA should be adjusted more accurately to match inflation.
With a lower or no hike, hopes will now rest on the new Pay Commission.
