Central government employees are likely to get a 4% increase in Dearness Allowance (DA) starting July 2025, according to the latest inflation data. This would raise the existing DA from 55% to 59%, offering some financial relief as employees look forward to the upcoming 8th Pay Commission revision.
DA Likely to Rise Following CPI-IW Trend
The All India Consumer Price Index for Industrial Workers (AICPI-IW), which determines DA rates, climbed to 144 in May 2025, continuing its upward trend in recent months. If the index reaches 144.5 in June, the 12-month average is projected to be around 144.17. As per the 7th Pay Commission formula, this would result in a DA rate of 58.85 percent, which will be rounded up to 59 percent.
Official Announcement Expected Around Diwali
Although the hike will be effective from July, the official announcement is expected around September or October, in time for the Diwali festival. This follows the usual trend of DA announcements coinciding with festive periods to boost consumer sentiment.
7th Pay Commission’s Final Hike
This upcoming hike will likely be the last DA revision under the 7th Pay Commission, which ends on December 31, 2025. The 8th Pay Commission was announced in January 2025 but is yet to be formally constituted. There has been no appointment of chairman or members, and the Terms of Reference (ToR) are still pending.
8th Pay Commission May Be Implemented by 2027
Historically, a new pay commission takes 18 to 24 months to submit its report and roll out implementation. Based on that timeline, the 8th Pay Commission’s recommendations may become effective only by 2027, though the new pay structure is expected to be applicable from January 1, 2026, with arrears paid retroactively.
