DA Hike from January 2026: Central Government Employees Likely to Get 61% Dearness Allowance

DA Hike from January 2026: Central Government Employees Likely to Get 61% Dearness Allowance

NEW DELHI: Central government employees and pensioners are set to receive another hike in Dearness Allowance (DA) and Dearness Relief (DR) from January 2026, marking the first revision outside the 7th Pay Commission cycle.

As per the latest Consumer Price Index for Industrial Workers (CPI-IW) trend, the DA is expected to rise by around 2 to 3 percentage points, taking the overall rate close to 60.61%. The official announcement for the January–June 2026 cycle is likely in March next year.

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Union Government had recently approved a 3% hike in DA and DR for the July–December 2025 period, bringing the current rate to 58%. That was the final increase under the 7th Pay Commission, which officially concludes its term on December 31, 2025.

Usually, when a new Central Pay Commission is implemented, DA is merged into the basic pay, resetting the calculation to zero. However, with the 8th Pay Commission yet to be constituted, the DA revisions are expected to continue every six months for at least another two to three years.

The DA is calculated using the All India Consumer Price Index for Industrial Workers (AICPI-IW). The formula currently in use, as per the 7th Pay Commission, is:
DA (%) = [(Average AICPI-IW for the last 12 months) – 261.42] ÷ 261.42 × 100

The index has shown a steady upward trend throughout 2025. As of August 2025, the AICPI-IW stood at 147.1. If the index continues to rise by an average of 0.6 points per month, it could touch 149.5 by December 2025. Based on this projection, the 12-month average would come to around 145.79, which, when converted from the 2016 base to the 2001 base (×2.88), equals 419.87. Applying the official formula gives a DA figure of approximately 60.61%.

This means the next DA revision could bring an increase of about 2 to 3 percentage points over the current 58%. While the final figures will depend on official CPI-IW data from the Ministry of Labour, the trend clearly suggests continued inflationary pressure.

For central government employees and pensioners awaiting the 8th Pay Commission, the January 2026 DA revision may provide some financial relief by slightly increasing take-home pay.