Central government employees and pensioners may see only a small increase in their pay from January 1, 2026.
The Dearness Allowance (DA) and Dearness Relief (DR) are expected to go up by just 2 percentage points — from 58% to around 60%.
If this happens, it will be the second time in a row that the DA hike is only 2%, matching the lowest increase seen in the last seven years.
Why This DA Hike Is More Important Than It Looks
This upcoming DA revision is not just a routine change.
It is significant for three major reasons.
First DA Hike After the 7th Pay Commission Term Ends
The 7th Pay Commission completes its 10-year cycle on December 31, 2025.
The DA coming in January 2026 will be the first increase outside the commission’s official term.
8th Pay Commission Not Ready Yet
The 8th Pay Commission has been formed, but its Terms of Reference do not mention when the new pay structure will be implemented.
The commission has 18 months to submit its report, and after that, it usually takes another two years for the government to study and approve the recommendations.
So, realistically, higher salaries under the 8th CPC may only arrive by late 2027 or early 2028.
This DA Will Influence Future Basic Pay
Whenever a new pay commission is implemented, the DA at that time is merged into the basic pay.
This means the DA hikes from January 2026 to July 2027 will decide the revised basic pay under the 8th CPC.
So even a modest 2% hike matters in the long run.
What the AICPI-IW Data Suggests
DA is revised based on the Consumer Price Index for Industrial Workers (CPI-IW).
The latest data up to October 2025 shows steady growth:
July 2025: 146.5
August 2025: 147.1
September 2025: 147.3
October 2025: 147.7
The current DA is 58%. Based on this trend and expected values for November and December, the DA for January 2026 is pointing toward 60%.
Even with higher inflation, the increase isn’t big enough to push the DA beyond 60% after rounding, which is why the hike is likely to stay at 2%.
What This Means for Your Salary
If your basic pay is Rs 50,000:
At 58% DA: Rs 29,000
At 60% DA: Rs 30,000
So, your monthly increase will be around Rs 1,000 before tax.
Helpful, but not a major relief, especially when household expenses are rising.
Why the Next Few DA Hikes Matter Even More
From January 2026 to mid-2028, at least four DA hikes will take place.
All of these will contribute to the DA amount that eventually gets merged with the basic pay under the 8th Pay Commission.
So even if the first hike is small, the cumulative increase will play a big role in shaping future salaries.
Final Summary
The DA/DR hike from January 2026 is expected to be 2%, taking DA to around 60%.
This will be one of the smallest increases in seven years.
The hike is crucial because it will help shape the revised basic pay under the 8th Pay Commission.
With the 8th CPC still far from implementation, employees should closely track each DA increase over the next few years.
