DA Hike July 2025: Central Employees May See Modest Increase in Dearness Allowance

Central government employees and pensioners may soon receive another revision in their Dearness Allowance (DA), although the July 2025 hike might be smaller than usual, based on current inflation trends.

Current Status: DA Raised to 55% from January 2025

Earlier this year, the Modi government approved a 2% DA hike effective from January 2025, raising the total Dearness Allowance from 53% to 55%.
Employees will receive the increased DA with their April salary, along with arrears paid in May.
The next DA adjustment will happen in July 2025, following the release of the All India Consumer Price Index (AICPI) data for January to June 2025.

Expected DA Hike in July 2025: Could It Be Below 2%?

According to the latest available data:

• AICPI Index for January 2025: 143.2

• AICPI Index for February 2025: 142.8 (a drop of 0.4 points)

• Retail Inflation (March 2025): Fell to 3.34%, a five-year low.

The continuous drop in the inflation index suggests that the upcoming DA hike could be less than 2%, a rare occurrence as previous hikes were typically in the range of 3-4%.

However, final calculations will depend on the AICPI figures for March, April, May, and June 2025, which are yet to be released.

How Dearness Allowance Is Calculated

The Dearness Allowance under the 7th Pay Commission is determined using the following formula:

DA% = [{12-month average of AICPI-IW (base 2001=100) 261.42} ÷ 261.42] × 100

Currently, with the 12-month average AICPI at 392.83, the DA calculation stands approximately at 50.26% of the basic salary.
This mechanism ensures that DA directly correlates with cost-of-living changes and inflation rates.

Looking Ahead: 8th Pay Commission from January 2026?

The tenure of the 7th Pay Commission concludes on 31st December 2025, and the 8th Pay Commission is likely to be implemented from 1st January 2026.
Key expected impacts include:

• Fitment Factor: Estimated between 2.28 to 2.86

• Salary Increase: Could range between 30-40%

• Minimum Basic Salary: Expected to rise from ₹18,000 to ₹51,480

Furthermore, if DA crosses 50% before the 8th Pay Commission implementation, it may be merged into the new basic pay structure.

Conclusion

While employees await the July 2025 DA revision, early signs point to a modest increase. With the upcoming 8th Pay Commission on the horizon, central employees could expect significant structural changes to their salary framework in 2026.

Stay tuned for updates as more AICPI data becomes available in the coming months.