Dearness Allowance : Another bad news has come out for central employees and pensioners. The central government had increased dearness allowance and dearness relief by 2 percent in March 2025, increasing the dearness allowance of about 1.2 crore central employees and pensioners from 53 percent to 55 percent. But now, due to the fall in inflation rate during the first three months of 2025, it is being speculated that this time the DA may increase by less than 2 percent, or there may be no increase in DA at all. In such a situation, it would not be wrong to say that this time the DA revision may be disappointing for employees and pensioners.

Least increase in Dearness allowance in 78 months

This is the lowest increase in DA seen in the last 78 months. Now it is estimated that the increase in dearness allowance for July-December 2025 may be very low or may not happen at all. There is a wave of concern among central employees and pensioners about this, as it may dash their hopes.

Understand the complete calculation of DA hike

If this happens, then those who were expecting a big increase in dearness allowance for July-December 2025 may get a big shock. This will be the last update in DA under the Seventh Pay Commission, as the term of the Seventh Pay Commission will end at the end of this year.

Now the question arises that how much will the employees and pensioners benefit according to the DA hike. Let’s understand this:

What is Dearness Allowance (DA)?

DA is a type of cost-of-living adjustment allowance, which is given to central and state government employees and pensioners to cover the rising rate of inflation. Dearness Allowance is reviewed from time to time, and it is revised twice every year for January-June and July-December.

How is DA decided?

The rate of dearness allowance (DA) is decided on the basis of All India Consumer Price Index for Industrial Workers (AICPI-IW) released by the Labour Bureau. AICPI-IW decides the increase in DA on the basis of the data of the last six months. That is, DA is calculated on the basis of AICPI-IW data.

What is the reason for the low increase?

AICPI-IW data has seen a decline for the first two months of 2025, and due to this, the rate of increase in DA is expected to be very low. An example of this is the AICPI-IW falling by 0.4 points to 142.8 in February 2025, while it was 143.2 in January 2025. This suggests that the increase in dearness allowance may be very limited or there may be no increase in DA.

Apart from this, year-on-year inflation declined by 2.59 percent to 3.34 percent in February 2025, which is a 5-year low. After this, AICPI-IW is also expected to decline in March and April. This makes it clear that the expectations of increase in dearness allowance may now be reduced.

Calculation of DA hike under 7th Pay Commission

The calculation of increase in dearness allowance is based on the average of AICPI-IW. Its formula is as follows:

*DA = (Average of CPI-IW for last 12 months (Base 2016=100) x 2.88–261.4)100/(261.4)

In this, 261.4 is the base index determined by the 7th Pay Commission.

Big blow for pensioners

If there is no improvement in the index figures, then the increase in DA in July 2025 may be very low, or the DA may become zero. This will affect the basic salary of government employees and pensioners may have to face a reduction in dearness relief. Dearness allowance is the most important part for pensioners, and if there is no increase in it, it may disappoint them.

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