DA Hike: Nearly 1 crore central employees and pensioners are eagerly waiting for a salary hike. The hike in DA (Dearness Allowance) and DR (Dearness Relief) (which is announced twice a year – in July and December) is expected to be announced.
DA Hike: Nearly 1 crore central employees and pensioners are eagerly waiting for a salary hike. The hike in DA (Dearness Allowance) and DR (Dearness Relief) (which is announced twice a year – in July and December) is expected to be announced. This will also be the last DA and DR hike for around 33 lakh central government employees and 66 lakh pensioners under the 7th Pay Commission. The recommendations of the 7th Pay Commission were implemented from January 2016 and are set to expire in December this year.
When is the announcement possible
Let us tell you that this DA hike usually comes into effect from July, but it is announced late and is usually credited to the accounts of central government employees and pensioners around October with the festive season in the country. So, will government employees be able to celebrate a substantial hike in salary around October? What kind of DA hike should they expect this time? Let’s know the analyst’s opinion
What was the last hike in DA announced by the government?
In March this year, the government announced a 2% hike in the dearness allowance given to central government employees and pensioners, effective from January 2025, making it 55% of their basic pay. Prior to this hike, DA was 53% of the basic pay. DA is an important factor in the salary of government employees, as it helps them mitigate the impact of inflation on their income.
How much DA hike can employees expect?
The DA hike is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which is released monthly by the Labour Bureau under the Ministry of Labour. The bureau shares these index values every month that track the relative changes in retail prices of a certain category of goods and services consumed by industrial workers over a period of time.
Calculation of Dearness Allowance for Employees
7th Pay Commission DA% = [{12-month average of AICPI-IW (base year 2001) for the last 12 months – 261.42}/261.42×100]
These are the CPI-IW index values for the last 12 months, June 2024 to May 2025, as per data available on the Labour Bureau website. However, we first need to add the 2016 base values to the 2001 base values, for this we need to multiply it by a factor (2.88). This will be 412.70 (143.3 x 2.88). Abhishek Kumar, RIA and founder of Sahaj Money, told ET, “This factor of 2.88 has been worked out to make the latest base year (2016) equal to 2001. Labour Bureau data shows that for August 2020, the value of CPI-IW under the old base year (2001=100) was 33.8 and CPI-IW under the new base year (2016=100) was 117.4, so the factor is calculated as 338 ÷ 117.4 or 2.88. Now, putting everything in the formula, the possible DA hike % under 7th Pay Commission is as follows:
412.70-261.42/261.42 x 100= 0.578
This comes to 57.8% or approximately 58%. Based on these calculations, the central government may increase DA by 3%. and the current Dearness Allowance (DA) will increase from 55% to around 58%. This means if a person’s basic salary is Rs 25,000, his DA will increase from the current Rs 13,750 to around Rs 14,500.
