8th Pay Commission DA hike: The central government will announce the first dearness allowance (DA)/dearness relief (DR) revision for 2026 before the Holi festival in March. The key allowance is revised twice a year – for the January-June period in March and for the July-December period around Diwali in September/October.
DA is calculated using the All-India Consumer Price Index for Industrial Workers (AICPI-IW). Currently, DA is broadly calculated using this formula:
DA% = (Average AICPI(12 months)–261.42)/261.42 × 100
(261.42 is the 7th CPC base index linked to AICPI with 2001=100)
The index numbers for 12 months (July to June or January to December) are added up, averaged, and then plugged into the formula.
For the January 2026 DA hike, the government will use AICPI-IW data from January 2025 to December 2025.
AICPI-IW data for November 2025 out
The Labour Bureau, Ministry of Labour & Employment, has released the figures for the All India Consumer Price Index – Industrial Workers for November 2025. The index for November shows the rising cost of living across industrial centres in India.
The latest data from the Labour Bureau confirms a 0.5-point increase in the consumer price index, bringing the index to 148.2. This upward movement has taken the index to 148.2 in November. The AICPI-IW data for December will come early next month, which will decide the exact hike in DA for central government employees.
For the calculation purpose, let’s suppose the index rises again by 0.5 percentage points for December 2025 to 148.7, which means the average CPI will stand at 145.58.
DA% = (Average AICPI(12 months)–261.42)/261.42 × 100
With this, the average index for the year improves further, and the DA calculation throws up a figure of about 60.34%.
But again, because of rounding rules, this is also rounded off to 60% DA.
The DA currently stands at 58% (from July 2025). Based on the data till November and possible trends for December, the expected DA from January 2026 is moving to over 60%.
Why only 2% despite rising inflation?
The key reason is mathematical and structural:
The AICPI-IW is rising, but not sharply enough to push the DA into the next whole percentage after rounding.
Both a flat index and a mildly rising index are falling within the same DA band. As a result, even with inflation rising slightly, the DA rise is capped at 2 percentage points in January 2026. In other words, inflation is rising, but not fast enough to give a 3% DA raise.
Lowest DA hike in 7 years – what does that mean for you?
Since January 2019, there has been only one other occasion when DA was hiked by just 2% – in January 2025. Most other hikes have been 3% or higher, especially when inflation was stronger. So, if the January 2026 DA hike is indeed limited to 2%, it will match the lowest hike in the last seven years, and come at a time when employees were hoping for stronger relief ahead of the 8th Pay Commission.
To put it in simple numbers:
Suppose your basic pay is Rs 30,000.
At 58% DA, you get Rs 17,400 as DA.
At 60% DA, your DA goes up to Rs 18,000.
So, the increase is Rs 600 per month before tax.
This is helpful, but not a big leap, especially if your household expenses have risen sharply.
8th Pay Commission DA revision
The 10-year term of the 7th Pay Commission ended on December 31st, 2025 with DA at 58%, which means the January-June 2026 DA hike is the first outside the 7th pay panel purview. With the salary and pension revision under the 8th Pay Commission still at least 18 to 24 months away, the next 4 DA hikes will ultimately be critical for over 1 crore employees and pensioners, as at a later stage, the DA will be merged into the basic pay when the new pay panel recommendations actually take effect.