DA Hike July 2025 / Good news for central employees, they may get a gift of 4% DA!

DA Hike July 2025: Good news for central government employees and pensioners! Dearness Allowance (DA) is likely to increase by 4% from July 2025. The latest data from the All India Consumer Price Index for Industrial Workers (AICPI-IW) has further strengthened this expectation. The index has increased by 0.5 points to 144 in May 2025. It has seen a steady increase from March to May – 143 in March, 143.5 in April and now 144 in May. If the index increases by 0.5 points in June 2025 as well, the DA may increase from 55% to 59%.

Mathematics of DA increase

DA is calculated based on the average of AICPI-IW of the last 12 months. According to the recommendations of the 7th Pay Commission, its formula is:

DA (%) = [(CPI-IW average of last 12 months - 261.42) ÷ 261.42 × 100]

Here 261.42 is the base value of the index. If the AICPI-IW reaches 144.5 in June 2025, the 12-month average will be around 144.17. Putting this average in the formula, the DA comes to around 58.85%, which will be considered 59% after rounding off. That is, there will be an increase of 4% from the current 55%. The figures from January to May were pointing to a 3% increase, but the June figure may take it to 4%.

When will DA be announced?

Although the new DA will be effective from July 2025, the government usually announces it in September or October, especially around the festive season. This time too, it is expected that this big announcement can be made around Diwali. Employees and pensioners are eagerly waiting for this news.

Last hike of 7th Pay Commission

This DA hike of July-December 2025 will be the last hike under the 7th Pay Commission, as the term of this commission ends on 31 December 2025. On the other hand, the 8th Pay Commission has been announced in January 2025, but the names of its chairman and panel members have not been decided yet. The Terms of Reference (ToR) have also not been revealed. The government had indicated that the ToRs would be ready by April and the commission would start work, but no concrete update has been received yet.

Possibility of delay in 8th Pay Commission

If we look at the history of previous pay commissions, it takes 18 to 24 months for the recommendations to be implemented. In such a situation, the recommendations of the 8th Pay Commission are likely to be implemented by 2027. This means that central employees and pensioners will continue to get many more DA hikes on their existing basic salary.

Relief for employees

The 8th Pay Commission will definitely be delayed, but the relief for the employees is that the government will give the salary and pension benefits applicable from January 1, 2026 in the form of arrears. That is, employees will not only get new benefits, but the amount of arrears will also be given in lump sum.