Last DA Hike Under 7th CPC To Be 3% or 4%? Anticipation Builds For July-December DA Hike

Dearness Allowance (DA) hikes are based on the average All India Consumer Price Index (CPI-IW) for industrial workers, which reflects changes in the cost of living. The government announces a DA/DR hike twice a year. However, the announcements are made in March and September. The hike is applied retroactively every year between January and July.

The central government employees are eagerly waiting for the official government announcement on DA, DR hike for the July-December period. This DA, DR hike is going to be the last one under the 7th Pay Commission because the new 8th Pay Commission will be in place from January 2026. 

The AICPI-IW Figures for May 2025 released by Labour Beaureau recently has once again grabbed attention on the expected Dearness Allowance (DA) and Dearness Relief (DR) hike for lakhs of govt employees and pensioners which is due for July-December 2025.

As per the data published by Labour Bureau, attached office of the M/o Labour & Employment the All-India CPI-IW for May 2025 increased by 0.5 point and stood 144.0 (one hundred forty four). Year-on-year inflation for the month of May 2025 stood at 2.93% as compared to 3.86% in May, 2024. The Bureau has been compiling Consumer Price Index for Industrial Workers every month on the basis of retail prices collected from 317 markets spread over 88 industrially important centres in the country.

The rise in May 2025 AICPI-IW Figures comes after rise in the last two months of the CPI-IW. March 2025, the All-India Consumer Price Index for Industrial Workers (AICPI-IW) stood at 143.0, representing a 0.2-point increase from the previous month. Year-on-year inflation for the month of March, 2025 stood at 2.95% as compared to 4.20% in March, 2024. The All-India Consumer Price Index for Industrial Workers (AICPI-IW) stood at 143.5 in April. Year-on-year inflation for the month of April, 2025 stood at 2.94% as compared to 3.87% in April, 2024, according to the Labour Bureau.

CPI-IW index values from June 2024 to May 2025 are as follows: 

June 2024: 141.4

July 2024: 142.7

August 2024: 142.6

September 2024: 143.3

October 2024: 144.5

November 2024: 144.5

December 2024: 143.7

January 2025: 143.7

February 2025: 143.2

March 2025: 142.8

April 2025: 143

May 2025: 143.5

June 2025: 144

Average of AICPI-IW over the last 12 months: 143.3

This increase of figures in the last three months AICPI-IW --March, April and May – hint towards expected DA, DR for central government employees and pensioners at around 58.08 percent. On the basis of the figure, media reports have calculated a hike of 4% hike from July 2025. DA will be thus likely be pushed from current 55 percent to 59 percent, ahead of the implementation the 8th Pay Commission from January 2026.

These are however just early DA, DR hike predictions. It all depends on the AICPI-IW figures for the next month i.e for June 2025, to arrive at a concrete conclusion on DA hike for central government employees and pensioners.

Much to market expectations, the Union Cabinet led by PM Narendra Modi on March 28 announced the much awaited Dearness Allowance (DA) and Dearness Relief Hike for lakhs of central government employees. The Modi government  announced hike in the dearness allowance by 2 percent, thus taking the DA from 53 percent to 55 percent.

The basic salary of the employee is Rs 18,000

Dearness Allowance Hiked To 55 Percent: Pay increase of Rs 360 more per month

New Dearness Allowance Annually: Rs 4,320