Potential Increase in Dearness Allowance for Central Employees by July 2025
Overview of DA Hike
DA Hike: The All India Consumer Price Index for Industrial Workers (AICPI-IW) has risen by 0.5 points to reach 144 for May 2025. This index has shown a consistent increase over the past three months, moving from 143 in March to 143.5 in April, and now standing at 144 in May. Given this trend, there is a possibility of a 3 to 4 percent increase in the Dearness Allowance (DA) starting July 2025. Currently, the DA for central government employees is set at 55 percent. The final decision regarding the DA increase will depend on the AICPI-IW data for June 2025, which is expected to be released in early August this year.
AICPI-IW Index Indicates Potential Increase
AICPI-IW Index Indicates Potential Increase
If the AICPI-IW index increases by 0.5 points to 144.5 in June 2025, the average AICPI over the past 12 months will rise to approximately 144.17. Based on the 7th Pay Commission formula, this average adjustment could lead to an estimated DA of around 58.85 percent for central government employees.
This would mean an increase in the DA from 55 percent to 59 percent, potentially resulting in a 4 percent hike starting July 2025. Therefore, this anticipated 0.5-point increase in the June index could lead to a slightly higher DA increase than previously estimated.
How DA is Calculated
How DA is Calculated
The calculation of DA is based on the average AICPI-IW data from the past 12 months, as recommended by the 7th Pay Commission. Data from January to May has already been compiled, indicating a basis for a 3 percent increase. The final increase in DA will be determined by the June figures.
- DA (%) = [(Average CPI-IW of the last 12 months) – 261.42] ÷ 261.42 × 100
- Here, 261.42 is the base value of the index. This formula determines the DA based on the monthly average of CPI-IW.
Announcement Timeline for DA
Announcement Timeline for DA
While the new DA is set to take effect from July 2025, the government typically announces it around the festive season in September or October. It is likely that the announcement will coincide with Diwali this year.