Amid further delays in 8th Pay Commission progress, central government employees and pensioners would be hoping for a good hike in dearness allowance (DA) and dearness relief (DR) for the January-June cycle of 2026. The next DA/DR revision for January-June 2026 will be announced in March next year. This increase is considered significant because it will be the first DA revision after the 7th Pay Commission’s scheduled term, which is ending on December 31, 2025.
The 7th Pay Commission’s final DA revision is complete
Recently, the government increased DA and DR by 3% for the July-December 2025 period ahead of the festive season. This took the DA/DR for employees and pensioners to 58%. This was the last DA revision under the 7th Pay Commission.
Normally, when a new Pay Commission is implemented, DA is adjusted to the Basic Pay, and DA calculations start from zero. However, given the potential delay in the 8th Pay Commission, employees and pensioners will continue to receive DA revisions every six months for the next two to three years. This means that DA may continue to increase steadily until the end of 2027 or early 2028.
How DA is calculated
DA is calculated based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). Currently, as per the recommendations of the 7th Pay Commission, this formula is applicable –
DA (%) = [(Average AICPI-IW for the last 12 months) – 261.42] ÷ 261.42 × 100
Here, 261.42 is the base value against which DA is determined based on inflation.
Data from January to August 2025
The AICPI-IW has seen a steady increase between January and August 2025. The index reached 147.1 in August. Now, data from the remaining four months—September to December 2025—will determine the DA increase for January 2026.
If we assume a similar increase in the coming months (with a 0.6 point increase), the index could reach 149.5 by December 2025.
Potential DA Calculation
Based on this, the average index for the last 12 months comes to 145.79. To convert this from the 2016 base to the 2001 base, multiply it by 2.88—that is, 145.79 × 2.88 = 419.87.
Now, plugging the values into the formula—
DA (%) = [(419.87 – 261.42) ÷ 261.42 × 100] = 60.61%
Thus, the potential DA rate could reach approximately 60.61% in January 2026.
How much will the increase be?
Currently, central government employees receive 58% DA. If the DA increases to 60.61% in January 2026, it will be an increase of approximately 2 to 3 percentage points.
What are the indications?
While the final decision will depend on government data and the official AICPI-IW data released by the Ministry of Labour, current trends indicate that inflationary pressures remain, and the next DA revision may bring some relief to employees.
In short, the January 2026 DA revision, while the first since the 7th Pay Commission, may bring another small increase in employees’ salaries—and this is likely to continue a series of relief until the upcoming 8th Pay Commission.