4% DA Hike: Good news for central employees! DA may increase by 4% on Rakshabandhan

A good news is coming for the central government employees and pensioners. Their Dearness Allowance (DA) may increase by 3 to 4 percent in July 2025. If this happens, then this increased amount can be given to them before Rakshabandhan. This decision will directly benefit crores of employees and pensioners across the country.

4% DA Hike: At present, employees are getting 55% DA. In March 2025, the government implemented this rate by increasing it by 2%. Now according to the new data, inflation has increased, due to which the government can increase DA again.

DA is reviewed twice a year

Dearness Allowance is reviewed twice a year. The first announcement is made in February-March, which is implemented from January. The second announcement is made in September-October, which is implemented from July. Its purpose is to give some relief to the employees from the impact of inflation. DA is given to government employees, while DR (Dearness Relief) is given to pensioners. The government decides to increase both of these when inflation increases.

How is the figure for increasing DA decided?

Dearness allowance is calculated on the basis of AICPI-IW (All India Consumer Price Index for Industrial Workers). This index is prepared keeping in mind the prices of 317 markets from 88 industrial areas of the country. Every month the Labor Bureau of the Ministry of Labor releases its report. In deciding DA for July 2025, the average of CPI-IW data of the last 12 months will be taken. The formula for calculation is:- Dearness Allowance (%) = \[(12-month CPI-IW average – 261.42) ÷ 261.42] × 100 (Here 261.42 is considered as the base, which is fixed according to the 7th Pay Commission.) In March 2025, CPI-IW was 143, which increased to 144 by May. If it remains stable or increases slightly in June, then an increase of 3-4% is almost certain.

Rural inflation declines, but the impact is limited

However, there has been a slight decline in rural inflation (CPI-AL and CPI-RL) in the May 2025 data. CPI-AL i.e. retail inflation for agricultural laborers has come down to 2.84% and CPI-RL i.e. for rural workers has come down to 2.97%, which was above 3.5% in April. But both these figures only show the trend of inflation, they are not used directly in the calculation of DA.

Despite this, if CPI-IW remains stable in June, then the government may soon announce a 3-4% hike in DA. This will increase the total DA to 58% or 59%.

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