Lakhs of central government employees and pensioners await the upcoming Dearness Allowance (DA) and Dearness Relief (DR) revision scheduled for July 2025. Currently, both stand at 55%, following the January 2025 hike. If inflation trends continue as observed in March 2025, there could be another 2%–3% increase on the horizon, as per a news report.
The Labour Bureau, under the Ministry of Labour and Employment, publishes the Consumer Price Index for Industrial Workers (CPI-IW) every month. This index forms the basis for calculating DA and DR adjustments.
However, these figures are indicative and not final.
Read More: 7th Pay Commission Update: Arunachal Pradesh Hikes DA to 55% for Govt Employees
The final DA for July 2025 will depend on CPI-IW data for April, May, and June. These figures will be averaged to determine the hike.
This means employees and pensioners may see a 2%–3% increase.
The formula used, as per the 7th Pay Commission, is:
DA (%) = [(Average CPI-IW for past 12 months) – 261.42] / 261.42 × 100
Here, 261.42 is the base index value adopted for the 7th Pay Commission. The average is computed using monthly CPI-IW numbers, ensuring a balanced view of inflationary trends.
A rise in DA directly boosts the monthly income of employees and pensioners.
For example:
This increment helps mitigate the effects of rising living costs.
Year-on-year inflation for March 2025 stood at 2.95%, a decrease from 4.20% in March 2024. While this annual figure is relatively moderate, DA calculations hinge on monthly changes in CPI-IW, making even minor upward movements impactful.
The CPI-IW data for April, May and June will be closely watched. The figure for June 2025 is expected by the end of July, after which the government will formally announce the revised DA and DR. Early signs suggest a positive revision is likely.
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Published on: May 8, 2025, 3:50 PM IST
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