The Union Cabinet has approved 3% dearness allowance (DA) hike for 49.2 lakh central govt employees, 68.7 lakh pensioners, I&B Minister Ashwini Vaishnaw said. The big decision is being taken ahead of Diwali, following the government’s usual practice of announcing the second tranche of DA increases before major festivals. The DA hike is announced twice a year – for the January-June cycle before Holi and the July-December cycle before Diwali.
How much would be DA hike for July-Sep 2025
The DA/DR hike was 3%, which raised the total dearness allowance to 58% of basic pay. For comparison, the January-June 2025 revision saw only a 2% increase, taking DA from 53% to 55%. It was the smallest hike in percentage terms in over six years.
What it means for employees
For employees, the impact is tangible. For instance, a central government staffer drawing a basic salary of Rs 18,000 will see their DA rise by Rs 540 per month. Pensioners will also benefit proportionately, with an expected rise in their dearness relief.
This DA hike is the last scheduled revision under the 7th Pay Commission, which completes its 10-year term on 31st December 2025.
Now, most employees must be wondering whether DA will be frozen until the next pay panel takes over. But past experiences suggest that DA revisions will continue twice a year as usual despite the 7th Pay Panel ending its term this year. Once the 8th Pay Commission is implemented, DA will be merged with basic pay.
Meanwhile, discussions around the 8th Central Pay Commission continue among central government employees as they eagerly await the Terms of Reference (ToR) and the appointment of members. Employee organisations have urged the government to expedite its formation, as the 7th Pay Commission nears completion.
The government had announced the 8th Pay Commission earlier this year in January.
With the DA increase, central employees and pensioners are likely to see a modest boost in their monthly income, providing some relief amid rising living costs, while the focus now shifts to the formation of the 8th Pay Commission.