7th Pay Commission: Central Employees and Pensioners Likely to Get 3% DA Hike Before Diwali

The festive season may bring welcome cheer for millions of central government employees and pensioners. According to reports, the government is preparing to announce a 3% hike in Dearness Allowance (DA) ahead of Diwali. If approved, the existing DA of 55% will rise to 58%, providing much-needed financial relief to a large section of employees and retirees.

Bi-Annual DA Revision Process

The central government revises DA twice a year to offset inflation’s impact on salaries and pensions. These revisions are carried out in two cycles:

• January to June

• July to December

Earlier in March 2025, the government had increased DA by 2% for the January–June cycle, raising it from 53% to 55%. Now, discussions are underway to approve a 3% hike for the July–December cycle, which will benefit crores of employees and pensioners across the country.

How Much Benefit Will a 3% DA Hike Bring?

The increase in DA is directly linked to an employee’s or pensioner’s basic salary or pension. Let’s break down the impact with examples:

• For Pensioners:
  Suppose a pensioner receives a basic pension of ₹9,000. Currently, with 55% DA, they get ₹4,950, making the total pension ₹13,950. With a 58% DA rate, the allowance will increase to ₹5,220, raising the total pension to ₹14,220. This means an additional ₹270 per month.

• For Employees:
  Consider an employee with a basic salary of ₹18,000. At 55% DA, they currently receive ₹9,900, taking their total salary to ₹27,900. With DA at 58%, the allowance will become ₹10,440, pushing the total salary to ₹28,440. This translates to a monthly gain of ₹540.

Though the increment may appear modest on an individual level, the collective impact on the government’s salary and pension bill is massive, as millions of beneficiaries are covered under the 7th Pay Commission.

How is DA Calculated?

Dearness Allowance is determined based on the Consumer Price Index for Industrial Workers (CPI-IW). As inflation rises or falls, DA is adjusted to protect the purchasing power of employees and pensioners. This ensures that their real income remains relatively stable despite fluctuations in market prices.

When Will the Announcement Be Made?

While no official notification has been released yet, past practice suggests that such decisions are usually announced after Navratri and before Diwali. This tradition of festive season hikes boosts consumer sentiment and also supports festive spending in the economy.

Why the Hike Matters Now

With rising costs of essentials, housing, and healthcare, a DA revision plays a critical role in easing financial pressure for middle-class families and retirees. Even a small increase provides extra support for household expenses during the festival season when spending naturally rises.

Bottom Line

If approved, the 3% DA hike will be a timely Diwali gift for central government employees and pensioners. It will raise the DA from 55% to 58%, offering direct monetary benefits while helping offset inflationary pressures. Employees and pensioners are now eagerly waiting for the government’s official announcement, which is expected in the coming weeks.