DA Hike Update: Dearness Allowance Likely to Touch 60% from January, Big Relief for Employees

There is encouraging news for central government employees and pensioners at the beginning of the new year. From January 2026, the Dearness Allowance (DA) for employees and Dearness Relief (DR) for pensioners is expected to increase by 2 percent. If the government approves this hike, the current DA rate of 58 percent may rise to 60 percent, offering much-needed relief amid rising living costs.

Why Is DA Expected to Increase to 60%?

The expected DA hike is based on data released by the Labour Bureau under the All India Consumer Price Index for Industrial Workers (AICPI-IW). According to the November 2025 figures released on December 31, 2025, the index rose by 0.5 points to 148.2. This increase has pushed the 12-month average DA calculation very close to the 60 percent mark.

Under the 7th Pay Commission, DA is calculated using the 12-month average of AICPI-IW with the base year set at 2016 = 100. Based on data available up to November 2025, DA has reached 59.93 percent, which is just a fraction below 60 percent. This makes a 2 percent hike almost certain.

Monthly Trend Clearly Signals a DA Hike

The month-wise DA calculation trend further strengthens expectations:

• July 2025: 58.53%

• August 2025: 58.94%

• September 2025: 59.29%

• October 2025: 59.58%

• November 2025: 59.93%

Only the December 2025 index data is pending. However, experts believe that even under less favorable conditions, the final DA figure will not fall below 60 percent.

What If December Data Changes?

Even with different scenarios for December 2025, the DA outcome remains above 60 percent:

• If the index stays at 148.2: DA will be around 60.34%

• If the index rises to 150.2: DA may reach 60.53%

• If the index falls to 146.2: DA will still be about 60.15%

Since the government announces DA only in whole numbers, any figure between 60.00% and 60.99% will be officially rounded off to 60%. This confirms a 2% increase from the current 58% level.

When Will the DA Hike Be Announced?

Although the revised DA will be effective from January 1, 2026, the official notification usually comes later. Based on past trends, the government is likely to announce the DA hike in March or April 2026. Once announced, employees and pensioners will also receive arrears from January 2026.

Why Is This DA Hike Especially Important?

This DA revision is considered crucial because January 1, 2026 marks the beginning of the new cycle for the 8th Central Pay Commission. Traditionally, when a new pay commission is implemented, the existing DA is merged into basic pay, and DA is reset to zero.

As a result, the 60 percent DA under the 7th Pay Commission becomes an important reference point. It can influence the fitment factor and salary restructuring under the upcoming pay commission.

How Will Employees and Pensioners Benefit?

• Central government employees will see an increase in monthly take-home salary

• Pensioners will receive higher Dearness Relief (DR)

• Arrears from January 2026 will provide a lump-sum benefit once announced

Overall, the expected DA hike is set to provide financial relief and stability to millions of families.