A great news may come for crores of employees and pensioners of the central government before Rakshabandhan. Discussion of a possible increase in dearness allowance in Dearness Allowance – DA is in full swing. If this happens, this center can prove to be a major relief package for employees before the festival.
Why can DA grow?
Given the latest boom in inflation and the data of AICPI-IW (All India Consumer Price Index for Industrial Workers), it is being speculated that DA can increase DA by 3% to 4%. In March 2025, the CPI-IW index was at 143 points, which has increased to 144 by May. Although the June figures are awaited, the trend is showing that the government may soon approve the increase in DA.
When is DA announced?
The central government revisions dearness allowance twice a year –
First: Applies from January and announcement in February-March
Second: Applies from July and announcement in September-October
In March 2025, the central government increased the DA of employees by 2%, causing the current rate to 55%. Now if it increases by 3 to 4 percent, then the new dearness allowance can reach 58% or 59%.
How is the calculation of DA?
DA is calculated under the 7th Pay Commission formula:
Dearness allowance (%) = [(12 महीने का औसत CPI-IW – 261.42) ÷ 261.42] × 100
261.42 is the base line set by the Seventh Pay Commission. CPI-IW data is prepared based on data collected from 317 retail markets of 88 industrial centers in the country. This data is released every month by the Labor Bureau under the Ministry of Labor and Employment.
What are the signs of CPI-Al and CPI-Rl?
Although CPI-A (Consumer Price Index for Agricultural Workers) and CPI-RL (for rural workers) do not directly come into Calculation, they reflect widespread inflation trends. In May 2025, CPI-A and CPI-RLs were recorded at 1305 and 1319 points respectively, indicating a slight decline compared to April. This indicates that rural inflation has softened.
When will the final announcement be done?
After the arrival of the CPI-IW data of June 2025, the government will formally announce new dearness allowances. It will then be implemented in September-October. It is estimated that if the figures maintain the existing trend, the government may approve an effective DA increase of 3-4% effective from July.
