7th Pay Commission: There is good news for over 1 crore central government employees and pensioners. The Dearness Allowance (DA) for the July-December cycle for these central staff will be announced around Diwali. The hike in DA will be 3%. So the DA will rise to 58% from the current level of 55%.
The DA is revised twice a year (every six months) on the basis of inflation data and formula-based calculation of the last 12 months. The All-India CPI-IW for June 2025 increased by 1 point and stood at 145, according to the Labour Bureau data.
In January 2025, the government gave a DA hike of just 2%, which increased the tally from 53% to 55%. At that time, some disappointment was also seen among the employees, as the expectations were much higher than that.
CPI-IW data for June has come; a 3% increase confirmed
The Labour Bureau has recently released the All India Consumer Price Index for Industrial Workers (CPI-IW) for June 2025, which was 145. With this, the average index for the 12 months between July 2024 and June 2025 has become 143.6.
How is DA calculated?
Under the 7th Pay Commission, DA is decided by this formula:
DA (%) = [(CPI-IW average × 2.88) – 261.42] ÷ 261.42 × 100
Now the CPI-IW average for the 12 months from July 2024 to June 2025 is 143.6.
Put this in the formula:
= [(143.6 × 2.88) – 261.42] ÷ 261.42 × 100
= (413.57 – 261.42) ÷ 261.42 × 100
= 152.15 ÷ 261.42 × 100
= 58.2%
As per government practice, the decimal is omitted, i.e. DA = 58% fixed.
July-December 2025 DA hike better than January-June cycle
In January 2025, with just 2% DA hike, the total rate had become 55%. Now with an increase of 3% from July 2025, it will become 58%. This will give additional cash benefits to the employees, especially during the festive season.
When will the DA hike announcement be made?
Although the new DA will be considered effective from July 1, 2025, the central government usually announces it in September or October — just before the festivals.
This time too, a formal announcement of DA/DR hike can be made around Diwali.
7th Pay Commission now in final stage, 8th still in limbo
This July-December 2025 DA hike will be the last scheduled hike under the 7th Pay Commission (7th CPC), as the term of this commission ends on December 31, 2025.
Although the 8th Pay Commission was announced in January 2025, the government has neither named its chairman and members, nor issued the Terms of Reference (ToR) so far.
There were indications from the government to prepare the ToR by April, but no concrete progress has been made so far.
2-year delay is possible in the 8th Pay Commission
If we look at the history of previous pay commissions, it takes 18 to 24 months for the recommendations of any commission to be implemented. On this basis, it is estimated that the recommendations of the 8th Pay Commission may be implemented in 2027. This means that till then central government employees and pensioners will continue to get DA hike on their current basic pay.