8th Pay Commission Update: Dearness Allowance Revision Likely for Central Government Employees, Here’s How Much Increase Is Expected
Central government employees are once again focusing on Dearness Allowance (DA), as the next revision is scheduled to take effect from January 2026. With inflation trends under close watch, employee unions believe that the upcoming DA hike could be moderate to slightly higher, depending on the final inflation data for December 2025. While the government has not made any official announcement yet, expectations are gradually building.
DA Revision Happens Every Six Months
Dearness Allowance is revised twice a year — in January and July — to protect employees and pensioners from the impact of rising inflation. The calculation of DA and Dearness Relief (DR) for pensioners is directly linked to the All India Consumer Price Index for Industrial Workers (AICPI-IW), released by the Ministry of Labour and Employment.
According to official data, the AICPI-IW for November 2025 stood at 148.2. This index plays a crucial role in ensuring that the real value of salaries and pensions does not erode due to inflation. Any upward or downward movement in this index directly influences the DA percentage applicable to central government employees.
What Was the Last DA Increase?
In the previous revision, the central government increased DA from 54% to 58%, effective July 2025. This hike provided some relief to employees amid rising living costs. Now, all eyes are on the December 2025 AICPI-IW figures, as they will determine the DA revision applicable from January 2026.
Employee unions have indicated that if inflation remains elevated in December, the DA hike could be higher than initially anticipated.
Expected DA Hike in January 2026
Several central employee associations estimate that the DA increase in January 2026 could be in the range of 3% to 5%. According to Manjeet Singh Patel, President of the All India NPS Employees Federation, if the December AICPI-IW is assumed to be around 147, the DA hike may be limited to 3%.
However, if the December index remains close to the November level of 148.2, the increase could reach 5%. In that case, the DA for central government employees would rise from the current 58% to somewhere between 61% and 63%.
It is important to note that these figures are still projections based on available data trends. The final DA percentage will only be confirmed once the December inflation numbers are officially released.
When Will the Final Announcement Be Made?
The Ministry of Labour and Employment is expected to publish the AICPI-IW data for December 2025 in the coming weeks. Following the established process, the central government is likely to announce the revised DA rate during March or April 2026, with retrospective effect from January 2026.
Until then, employees and pensioners will need to wait for official confirmation.
End of the 7th Pay Commission Term
Another significant development for central government employees is the conclusion of the 7th Central Pay Commission, whose tenure officially ended on December 31, 2025. Despite this, there has been no change in basic pay from January 2026 onward.
The 8th Pay Commission was constituted in November 2025, and it is expected to submit its recommendations, including the crucial fitment factor, after approximately 18 months. The fitment factor will determine the next revision in basic salaries.
Once the new fitment factor is implemented, the existing DA will be merged into the basic pay, and the DA percentage will be reset to zero — a standard practice followed during pay commission transitions.
What Employees Should Keep in Mind
For now, the DA revision remains the most immediate financial update for central government employees. While the expected hike of 3–5% may offer incremental relief, the bigger structural changes in salary will only come after the implementation of the 8th Pay Commission recommendations.
In summary, January 2026 is likely to bring a DA increase for central government employees, with the final percentage hinging on December’s inflation data. Until official figures are released, all estimates should be viewed as informed expectations rather than confirmed decisions.
