Govt Approves 3% DA Hike for Employees & Pensioners, Effective July 2025
Govt Approves 3% DA Hike for Employees & Pensioners, Effective July 2025
In a festive boost for central government staff, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a 3% hike in Dearness Allowance (DA) for employees and pensioners, Information & Broadcasting Minister Ashwini Vaishnaw announced during a Cabinet briefing today.
With this increase, the DA will rise from 55% to 58% of the basic pay, benefiting over 1.2 crore central government employees and pensioners nationwide. The hike, effective from July 1, 2025, aims to provide additional financial relief during the ongoing festival season.
Currently, entry-level employees with a basic salary of around Rs 18,000 will see an increase of nearly Rs 540 per month. For example, an employee with Rs 30,000 total salary, receiving Rs 18,000 as basic pay, will see their DA rise from Rs 9,900 to Rs 10,440 monthly after the 3% hike.
The DA is calculated using the Consumer Price Index for Industrial Workers (CPI-IW). The government averages CPI-IW data over the previous 12 months and applies the 7th Pay Commission formula:
DA (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100
(Base CPI-IW 2016 = 261.42)
The DA is revised twice yearly, in February-March and September-October, with retrospective effect from January and July, helping employees manage inflationary pressures.
8th Pay Commission Update: While the 8th Pay Commission was announced in January 2025, its Terms of Reference (ToR) and members are yet to be finalized. Experts suggest the implementation may occur by late 2026 or early 2027, with potential changes including a fitment factor of 1.8 and a rise in minimum pay from Rs 18,000 to Rs 30,000 per month.
This DA hike provides timely financial support and underscores the government’s commitment to the welfare of its workforce amid rising living costs.
