Central government employees and pensioners are set to receive a modest DA hike in the new year. According to a Financial Express report, Dearness Allowance (DA) and Dearness Relief (DR) are likely to increase by just 2% from January 2026, raising the current rate from 58% to 60%.
This expected adjustment marks the smallest DA hike in seven years, mirroring the incremental rise seen in January 2025. With inflation remaining a concern, many employees have expressed disappointment over the limited relief provided by this increase.
Why This DA Hike Is Historically Significant
This upcoming DA hike is particularly notable because it will be the first increase implemented outside the 10-year cycle of the 7th Pay Commission, which concludes on December 31, 2025.
The formation of the 8th Pay Commission is underway, but its Terms of Reference do not yet specify an effective date for the new pay structure. The commission is expected to take approximately 18 months to submit its report, followed by another two years for approval and implementation. As a result, employees may not see the new pay structure until late 2027 or early 2028.
How DA Calculation Points to a Modest Increase
DA is calculated based on the All-India Consumer Price Index for Industrial Workers (AICPI-IW). From July to October 2025, the index saw a gradual rise—from 146.5 to 147.7—reflecting steady but subdued inflation.
Even with November and December 2025 data factored in, the DA in January 2026 is projected to reach only around 60%, confirming a minimal hike. In short, while living costs are rising, the relief for employees remains limited.
Financial Impact of a 2% DA Hike
A smaller DA increase has a direct effect on take-home pay. For example:
- Basic Pay: ₹50,000
- DA at 58%: ₹29,000
- DA at 60%: ₹30,000
- Monthly Increase: Just ₹1,000
Though modest, this DA hike is crucial—along with the next three adjustments due in July 2026, January 2027, and July 2027—because these rates will form the basis for the new basic pay under the 8th Pay Commission.
What This Means for Employees Before the Next Pay Commission
The coming DA hikes will play a pivotal role in shaping future salaries. Even a small increase now accumulates and influences the revised pay structure once the 8th Pay Commission is implemented. Employees are advised to track official announcements from the Ministry of Finance and the Department of Personnel & Training (DoPT) for confirmation.
For authoritative updates on pay commissions and dearness allowance, refer to the official DoPT website.