Expectations of government employees and pensioners getting dearness allowance have started increasing. Dearness allowance is an important part of the salary for central government employees and pensioners.
Its objective is to reduce the impact of rising inflation and maintain the purchasing power of the employees. DA is calculated on the basis of All India Consumer Price Index (AICPI) and is revised twice a year with effect from January and July. However, it is usually announced in March and October.
The central government had last increased dearness allowance in April 2026. During this period, DA was increased from 58 percent to 60 percent, which is effective from January 1, 2026.
Calculation is done on the basis of 7th Pay Commission
Dearness Allowance is calculated on the basis of 12 month average of AICPI as per the formula decided by the 7th Pay Commission. DA has been increased 10 times since 2021. Of these, the biggest increase was 11 percent in July 2021, while it was increased by 3 percent in July 2025.
Why is dearness allowance important?
About 50 lakh central government employees and about 65 lakh pensioners benefit from any increase in Dearness Allowance and Dearness Relief (DR). These include employees and retired personnel of various departments including Defence, Railways. There are 18 different levels of employees prescribed in the salary structure of the government. Due to the different basic pay at each level, the actual amount received in DA is also different.
Dearness allowance is not just a part of salary but also affects other financial benefits related to basic salary. These include provident fund, pension, gratuity and other allowances. According to a report in Bank Bazaar, the 7th Pay Commission had also recommended that if dearness allowance exceeds 50 percent, then it can be merged with DA in the basic salary. At present, DA has reached 60 percent and if there is another increase in July, then further increase is possible.
Can DA increase by 3-4 percent this time?
At present, the AICPI-IW (All India Consumer Price Index-Industrial Workers) data for June 2026 is awaited. At the same time, according to the latest data released by the government, in June 2026, retail inflation rate was 4.38 percent and food inflation was 5.32 percent.
According to AICPI-IW, the index was recorded at 149.1 in March 2026, 149.9 in April and 150.8 in May. It is estimated that it may increase to around 151.7 in June 2026. This index is updated every month and reflects changes in the prices of goods and services used by industrial workers. Based on the available AICPI-IW data, it is believed that this time central employees and pensioners may get an increase in dearness allowance by 3 to 4 percent. However, the final decision will be taken only after the official data of June 2026 and the approval of the Central Government.
When can the decision on 8th Pay Commission come?
According to media reports, in view of inflation and rising cost of living, the government may announce another increase in DA during July or September this year. At the same time, the recommendations related to the 8th Pay Commission are likely to come after about 18 months of the formation of the commission. In such a situation, its final report may come out by February or April 2027.
Based on the experience of previous pay commissions, the recommendations may take two to three years to be implemented. In such a situation, if the new pay scale is announced in 2027, then its full benefits may be available to the employees till 2029 or 2030.