New Delhi, January 14, 2026
The next round of Dearness Allowance (DA) and Dearness Relief (DR) revision for central government employees and pensioners is due from January 1, 2026, and early indicators suggest a 2% to 3% hike, potentially pushing the rate beyond 60%.
The previous revision, effective from July 2025, raised DA/DR by 3 percentage points, taking the rate to 58%. The latest inflation numbers now point toward another increase.
AICPI-IW Index Signals DA/DR Crossing 60%
As per the All-India Consumer Price Index for Industrial Workers (AICPI-IW), the index stood at:
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146.5 in July 2025
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148.2 in November 2025
The December 2025 index is still awaited but is expected to rise further, strengthening prospects of a DA/DR hike.
Retail inflation in December 2025 surged to a three-month high of 1.33%, compared to 0.71% in November, driven mainly by rising prices of vegetables and protein-rich food items. Earlier in September, inflation had peaked at 1.44%.
The rising figures indicate mounting cost pressures on industrial centers across India, pushing the DA/DR formula to likely breach the 60% threshold.
How the Numbers Have Risen Month-by-Month
AICPI-IW movement in 2025:
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March: 140.1
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April: 140.6
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May: 144.0
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June: 145.0
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July: 146.5
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August: 147.1
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September: 147.3
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October: 147.7
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November: 148.2
The index—compiled using retail prices collected from 317 markets across 88 industrial centers—rose by 0.5 points in November alone. November 2025 inflation stood at 2.56%, lower than 3.88% in November 2024, but steadily climbing.
DA Merger Into Basic Pay Denied by Govt
Once DA/DR crosses 50%, it can be merged with basic pay as per earlier norms.
However, Minister of State for Finance Pankaj Chaudhary clarified in Parliament that the government will not merge DA with basic pay or pension.
This statement has drawn criticism.
Dr. Manjeet Singh Patel, National President of the “National Mission for Old Pension Scheme India,” said:
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Employees already lose nearly 10% of their salary every month under current rules.
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DA non-merger means employees suffer financially despite rising inflation.
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The 8th Pay Commission may still take two years to be implemented.
He added that employees could effectively lose four years of monetary benefit if DA is not merged.
Unions Demand New DA/DR Calculation Formula
The Confederation of Central Government Employees and Workers has demanded a complete overhaul of the DA/DR calculation system.
General Secretary S.B. Yadav wrote to the Cabinet Secretary last year, urging that:
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DA should be calculated on a 3-month average, not a 12-month average.
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DA revision should be quarterly, not biannual.
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A separate consumer price index should be constructed specifically for central employees and pensioners.
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DA should be provided point-to-point, without rounding off.
Yadav highlighted that bank and LIC employees already receive point-to-point DA and quarterly adjustments, whereas central employees lose fractional benefits—for example, 42.90% becoming only 42%, with 0.9% DA withheld for six months.
He argued that central employees deserve the same fairness and transparency in DA computation.
With inflation rising and index data strengthening, all eyes are now on the December 2025 AICPI-IW report, which will determine the final DA/DR hike for January 2026.
