DA Hike 2025: Dearness Allowance Likely to Rise by 3% Before Diwali; Over 1 Crore Employees and Pensioners to Benefit

New Delhi, September 8, 2025: Ahead of Diwali, the central government is expected to announce good news for more than one crore employees and pensioners. According to reports, the government may increase the Dearness Allowance (DA) by 3% for the July–December 2025 period. If approved, DA will rise from the current 55% to 58%, directly boosting the salary and pension of lakhs of beneficiaries.

Biannual DA Revision

The government revises DA twice every year, once for the January–June period and again for July–December. While the official announcement can come at any time, the increase is always applied retrospectively for that specific period.

In March 2025, the government had raised DA by 2% for January–June, taking it from 53% to 55%. Now, expectations are high that a 3% DA hike could be announced before Diwali, raising it further to 58%.

How DA Impacts Salary and Pension

Dearness Allowance is calculated as a percentage of an employee’s basic salary or pension. Therefore, the impact varies from person to person depending on their pay scale.

• For Pensioners:
  Suppose a retired employee receives a minimum pension of ₹9,000. At the current 55% DA, they get ₹4,950 extra, making their total pension ₹13,950. With a 58% DA, the allowance will rise to ₹5,220, pushing the pension to ₹14,220. This means a net increase of ₹270 per month.

• For Employees:
  If an employee has a minimum basic salary of ₹18,000, their current DA (55%) amounts to ₹9,900. This makes their total salary ₹27,900. After the proposed hike, DA will increase to ₹10,440, raising the total salary to ₹28,440. The monthly salary will therefore increase by ₹540.

How DA is Calculated

DA is directly linked to the Consumer Price Index for Industrial Workers (CPI-IW). The formula used is:

DA (%) = [(12-month average of CPI-IW – 261.42) ÷ 261.42] × 100

Any rise in CPI-IW reflects inflation and directly impacts DA calculations, ensuring employees and pensioners get compensated for rising living costs.

When Will the Government Announce the Hike?

So far, the central government has not issued any official notification regarding the July–December DA revision. However, if past trends are considered, the announcement is likely to be made after Navratri and just before Diwali, giving employees and pensioners additional financial relief during the festive season.

Why This Matters

The DA hike comes at a time when discussions around the 8th Pay Commission have also started gaining momentum. For now, under the 7th Pay Commission, a 3% hike in DA will bring much-needed relief and increase disposable income, especially ahead of festive spending.

For more than 1 crore central government employees and pensioners, the proposed increase means higher take-home pay and enhanced pensions, making the upcoming festive season financially smoother.

✅ Bottom Line: If approved, the 3% DA hike will raise the allowance from 55% to 58%, benefiting over one crore employees and pensioners. The official announcement is expected around Diwali, adding to the festive cheer with higher salaries and pensions.