Central government employees and pensioners wait with bated breath for a raise in salary via a raise in Dearness Allowance (DA) and Dearness Relief (DR). The adjustment will be to their benefit; hence, about one crore persons stand to gain from it, and the announcement is likely to be made just before the Rakshabandhan festival of 2025. Typically, an increase in the DA occurs from July and is announced somewhat late, with payments flowing in around October, just ahead of India’s festive season. All this, to cushion the employees and pensioners against an unrelenting increase in inflation.
Final Hike of the 7th Pay Commission Grant
This DA increase will be the last under the 7th Pay Commission, which was implemented in January 2016 and shall expire by December 2025. Around 33 lakh employees and 66 lakh pensioners will be affected by the adjustment, which will be made based on the All India Consumer Price Index (AICPI) data from January to June 2025. Current estimates of DA, based on data till May 2025, are for a DA score of 57.85%, implying that the hike could be around 3%, taking the DA from 55% to 58%. The final figure will be verified with the June data, which must be finalized by July 31, 2025.
Effect on Salaries
These DA increases will provide some significant financial relief. At a basic pay of Rs 18000, a 3% hike means an increase of Rs 540 per month, while a 4% increase constitutes an increase of Rs 720 for the month. If arrears for July to September are accounted for, this payment would serve as a sizeable boost to the festive spirit. It is expected to be announced either during Rakshabandhan or Diwali time, following a Modi cabinet meeting, so that the government employees may get timely financial support from all sides.
The Future: 8th Pay Commission
All this adds to the speculative atmosphere on the 8th Pay Commission. It has been given the go-ahead in principle; hence, a committee is expected to be formed by August 2025. If formed on time, the new commission could come into existence by mid-2027 and could also have a very large impact on the salary structure and allowances. Until then, the DA hike expected to be granted will serve immediate relief to employees in managing rising costs during the festive period.
Also Read: EPS-95 Pension Hike Festive Update: Government Responds In Parliament