DA Hike 2026 Update: Before Holi, a relief package can be announced for central government employees and pensioners. An increase of 2% in Dearness Allowance (DA) and Dearness Relief (DR) is expected from January 2026. However, the final decision will become clear only after the official announcement of the government. This announcement is expected before Holi in March. Labor Bureau has released AICPI-IW data for December 2025.

Why will DA be given even after 7th Pay Commission?

Although the tenure of the 7th Pay Commission ended on 31 December 2025, till the recommendations of the 8th Pay Commission are implemented, the calculation of DA will continue on the basis of the basic pay of the 7th Pay Commission. Therefore, employees and pensioners will continue to get the benefits of DA increase.

What is Dearness Allowance (DA)?

Dearness Allowance is a part of the salary given to government employees to help mitigate the impact of rising inflation. The government increases DA twice a year, in January and July. DA is calculated directly on the basic pay. Therefore, increase in DA automatically increases the total salary.

What is AICPI-IW and why is it important?

AICPI-IW, or All India Consumer Price Index – Industrial Workers, is an index that reflects changes in prices of everyday goods. The Labor Bureau issues it every month. DA is determined on the basis of 12 month average of this index.

What do the figures for December 2025 indicate?

In December 2025, the AICPI-IW figure was 148.2. Based on this, the 12 month average is 145.54. After calculation DA comes to approximately 60.33%. The government usually announces DA in round figures. In such a situation, DA can be fixed at 60%. Currently, DA is 58%, which means a 2% increase is possible.

What was the last increase? Based on AICPI-IW data of June 2025, the government had increased DA by 3% in October 2025. At that time, DA had increased from 55% to 58%. This time, the data is not as strong, so a 2% increase is expected.

How is DA calculated?

There is a fixed formula for calculating DA. First, the new base year (2016) is linked to the old base year (2001). For this a factor of 2.88 is used.

formula

• DA% = ({Average AICPI-IW for 12 months × 2.88 – 261.42} ÷ 261.42) × 100 This calculation works out to be approximately 60.33% DA, which the government may round down to 60%.

What will be the impact of 2% DA increase on salary?

• If DA increases from 58% to 60%, then employees will see a direct benefit in their salary.


• For a basic salary of ₹20,000, the increase will be around ₹400 per month.


• ₹30,000: ₹600


• ₹40,000: ₹800


• ₹50,000: ₹1,000


• ₹60,000: ₹1,200


• ₹70,000: ₹1,400


• ₹80,000: ₹1,600


• ₹90,000: ₹1,800


• ₹1,00,000: ₹2,000 monthly profit

Pensioners will also benefit

DA increase will not only benefit the employees but also the pensioners. For pensioners it is called Dearness Relief (DR). DR also increases by the same percentage as DA.

When will the decision be announced?

The government usually announces DA for January in March. Therefore, it is expected that the central government may announce DA increase before Holi. If this happens, it will be a big relief for lakhs of employees and pensioners before the festive season.