DA Hike in July 2025: Before Rakshabandhan 2025, the government may announce a hike in DA, which will provide relief to crores of central government employees in the country.
DA Hike in July 2025: Central government employees and pensioners may get good news before Raksha Bandhan. They may get at least one more DA (Dearness Allowance) under the current Seventh Pay Commission.
Looking at the latest inflation figures, the dearness allowance of central government employees is likely to increase by 3 to 4 percent in July 2025. This will provide relief to crores of central government employees of the country.
The announcement is made twice a year
Usually, the increase in dearness allowance is announced twice a year in February-March and September-October, which is implemented from January and July respectively. This helps employees to cope with rising inflation. With a hike of 2 percent in March this year, the current DA rate is 55 percent. DA is given to government employees, while DR is given to pensioners.
How is DA calculated?
Dearness allowance for workers is calculated on the basis of All India Consumer Price Index for Industrial Workers (AICPI-IW). The AICPI-IW index is released on the basis of retail prices collected from 317 markets in 88 industrial centers of the country.
Every month, the Labor Bureau attached to the Ministry of Labor and Employment gives information about how much inflation has increased or decreased for workers and then on this basis, it is decided how much the dearness allowance should be increased.
In March 2025, the inflation meter AICPI-IW was at 143, which increased to 144 by May. According to this, dearness allowance can increase by three to four percent. The government calculates DA on the basis of the average of CPI-IW data of the last 12 months and the formula given under the 7th Pay Commission.
Dearness Allowance (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100
Here 261.42 is the time base considered under the 7th Pay Commission.
Decline in both CPI-AL and CPI-RL
Although the CPI-IW data for May 2025 has not been fully released yet, a rough estimate is being made from the new trend of inflation. According to the Ministry of Labor, retail inflation for agricultural and rural workers declined to 2.84 percent and 2.97 percent respectively in May 2025, up from 3.5 percent in April. Both CPI-AL and CPI-RL declined marginally to 1305 and 1319 points, indicating a decline in rural inflation.
Although CPI-AL and CPI-RL are not directly used for calculating dearness allowance, they indicate broader inflation trends that may also be reflected in CPI-IW. If CPI-IW remains stable or rises marginally in the coming months, the government may approve a 3-4 per cent hike in dearness allowance, taking the dearness allowance to 58 per cent or 59 per cent. The final hike will be known only after the release of CPI-IW data for June 2025.
