Big good news is coming for about 1 crore employees and pensioners of the central government. They are waiting for the last salary hike under the 7th Pay Commission. The announcement of the increase in Dearness Allowance (DA) and Dearness Relief (DR) for July 2025 is expected soon.
This increase will be effective from July. But, the money usually comes into the accounts by October. This time is just before the festive season. This upcoming hike will be the last under the 7th Pay Commission. The 7th Pay Commission came into effect in January 2016. It is ending in December 2025.
It will cover about 33 lakh employees and 66 lakh pensioners. The government had increased the DA by 2 percent in March this year. With effect from January 2025, it has increased from 53% to 55% of the basic salary. The purpose of this adjustment is to reduce the impact of inflation. DA is an important part of the salary of a government employee. All eyes are now on the 8th Pay Commission. This is scheduled to come into effect from January 2026.
When the new pay commission comes into effect, the DA is reset to zero. The reason is that the indexation basis changes. For example, before the 7th Pay Commission in 2016, the DA reached 125% of the basic pay. Ambit Capital estimates that if the DA rises to 60% before the end of the 7th Pay Commission, the salary is likely to increase by about 14% under the new structure. However, this will be the slowest growth in earnings seen in the last four commissions.
What can employees expect?
This increase is calculated using the Consumer Price Index for Industrial Workers (CPI-IW). The CPI-IW tracks monthly retail price changes in a fixed basket of goods and services.
The formula used under the 7th Pay Commission is as follows: DA (%) = [{12 month average of AICPI-IW (Base 2001) – 261.42}261.42] x 100
In March this year, the government had increased DA by 2%. Now it has increased to 55%. It is applicable from January 2025. The government does this so that the impact of inflation is reduced on the employees. DA is an important part of the salary of those doing government jobs.
The main purpose of DA and DR is to reduce the impact of inflation. Since the prices of goods and services keep rising. In such a situation, this increase will help employees and pensioners to cope with rising inflation. This will prevent their income from decreasing in real terms.
The payment of this increase is usually deposited in the accounts by October. This time often coincides with the festive season, when people’s expenses increase. In such a situation, the increased amount will strengthen their financial position during the festivals. Will help them celebrate the festival happily.
Eye on 8th Pay Commission
Now everyone’s eyes are on the 8th Pay Commission. It is expected to be implemented from January 2026. But, the government has not decided anything about it yet. Nor has it appointed any member. Experts say that there may be a delay of 1.5 to 2 years in its implementation. This means that employees may get arrears of the past time.
