New Delhi: In a move that could bring festive joy to lakhs of government employees and pensioners, the central government is expected to announce a 3 percent hike in Dearness Allowance (DA) soon. According to sources, the increase is likely to be approved by the Union Cabinet and will take retrospective effect from July 1, 2025.
This would be the second DA increase this year, following a 2 percent hike in March, which raised DA from 53 percent to 55 percent of basic pay. If the latest hike is confirmed, DA will rise to 58 percent, providing much-needed relief from inflation just ahead of Dussehra and Diwali.
What This Means for Employees
Dearness Allowance is a part of the salary that helps government employees cope with rising prices. It is revised twice a year based on the Consumer Price Index (CPI) for industrial workers.
For example, an employee earning a basic salary of Rs 60,000 currently gets Rs 33,000 as DA (at 55 percent). With the proposed 3 percent hike, DA will increase to Rs 34,800, offering an additional Rs 1,800 per month.
Bigger Pay Revisions Coming in 2026
While the DA hike is welcome, even bigger changes are expected with the Eighth Pay Commission, which was announced earlier this year in January. However, the government has yet to issue an official notification on its members and terms of reference (ToR).
Once the commission’s recommendations come into effect—expected from January 1, 2026—the DA is likely to be reset to zero and merged with basic pay, as was done during the 7th Pay Commission. The final salary hike will depend on the fitment factor, which experts estimate could lead to a raise between 13 percent to 34 percent.
