Central Government Employees Likely to Receive 2% DA Hike from January 2026 Ahead of 8th Pay Commission
The latest inflation data released by the Labour Bureau has effectively paved the way for the next Dearness Allowance (DA) revision for Central Government employees and pensioners. Based on the All-India Consumer Price Index for Industrial Workers (AICPI-IW) for November 2025, a 2% increase in DA from January 2026 now appears virtually assured.
This revision is particularly significant as it coincides with the expected commencement period of the 8th Central Pay Commission (8th CPC).
1. AICPI-IW Data for November 2025: Key Indicators
On 31 December 2025, the Ministry of Labour & Employment released the AICPI-IW data for November 2025, showing a continued upward trend in inflation:
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October 2025 Index: 147.7
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November 2025 Index: 148.2 (+0.5 points)
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Current DA Rate: 58% (effective from July 2025)
This rise has pushed the 12-month average AICPI-IW to a level that mathematically secures a minimum DA of 60% from January 2026.
2. Why a 2% DA Hike Is Almost Certain
Dearness Allowance is calculated using the 12-month average of AICPI-IW, as per the formula approved by the Government of India. A crucial feature of this calculation is that decimal values are ignored—only whole numbers are considered.
How the Rule Works:
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If the calculated DA comes to 60.12%, it is treated as 60%
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Even 60.94% remains 60%
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A DA rate of 61% is applied only if the average reaches 61.00% or above
Why a 3% Hike Is Unlikely
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Inflation data for the previous 11 months is already fixed
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Even if the December 2025 index remains at 148.2, the final DA calculation works out to approximately 59.94%
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Since decimals are ignored, this effectively results in a 2% increase from the current 58% to 60%
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To reach 61%, the December index would need to rise by more than 10 points in a single month, an event that has never occurred in the history of AICPI-IW
Conclusion on DA Rate
With November 2025 data now published, the 2% DA hike is effectively locked in, barring an extremely improbable inflation spike or collapse.
Expected DA from January 2026: 60%
3. Impact on Salaries and Pensions
The DA revision will benefit over one crore Central Government employees and pensioners. Below is an illustrative impact of a 2% DA hike:
| Basic Pay | DA @ 58% | DA @ 60% | Monthly Increase |
|---|---|---|---|
| ₹18,000 | ₹10,440 | ₹10,800 | ₹360 |
| ₹30,000 | ₹17,400 | ₹18,000 | ₹600 |
| ₹50,000 | ₹29,000 | ₹30,000 | ₹1,000 |
The increase will also apply to Dearness Relief (DR) for pensioners at the same rate.
4. Significance in the Context of the 8th Pay Commission
The January 2026 DA revision carries added importance as 1 January 2026 is widely considered the notional start date for the 8th Central Pay Commission cycle.
Traditionally, when a new Pay Commission is implemented:
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The prevailing DA is merged with Basic Pay
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DA is then reset to 0% under the new pay structure
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The merged DA directly influences the Fitment Factor, which determines the revised pay levels
If DA stands at 60%, it will form the final inflation cushion under the 7th CPC, significantly impacting the eventual salary restructuring under the 8th CPC.
Conclusion and Expected Timeline
Based on available data, a 2% DA hike from January 2026 is the most realistic and mathematically supported outcome. The official approval is expected from the Union Cabinet around March 2026, following which:
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DA will be revised retrospectively from 1 January 2026
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Employees and pensioners will receive arrears for the intervening months
Until further data is released, 60% DA remains the firmly established expectation.
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