The Modi government is planning to give a great gift to over 1.2 crore central employees and pensioners this festive season.
They are likely to announce a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) in the first week of October, just before Diwali.
This will provide significant relief by increasing the DA from 55% to 58%.
The new DA rate will be effective from July 2025.
According to reports, employees and pensioners will also receive arrears for three months, expected to be paid along with the October salary.
This will be the last DA hike under the 7th Pay Commission before the 8th Pay Commission begins.
How DA Increase Affects Salaries and When It Happens
The central government increases DA twice a year — once before Holi for the January-June period, and once before Diwali for the July-December period.
Last year, the hike was announced on October 16, and this year the announcement is expected a little earlier to coincide with Diwali (October 20-21), making it a festive gift for employees.
DA is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW) over 12 months.
From July 2024 to June 2025, the average CPI-IW was 143.6, which results in a DA of 58%.
This means a 3% rise in DA for the July-December 2025 period.
For example, if an employee’s basic salary is Rs 50,000, the DA at 55% was Rs 27,500.
With the new 58% DA, the allowance will be Rs 29,000, meaning an extra Rs 1,500 per month in their salary.
The Final DA Increase Before the 8th Pay Commission
The 7th Pay Commission will end in December 2025, so this is expected to be the last DA hike under it.
Although the government announced the formation of the 8th Pay Commission in January 2025, the members have not been named yet.
The 8th Pay Commission is expected to start only by late 2027 or early 2028.
