Central government employees may receive a festive gift this year in the form of a Dearness Allowance (DA) hike. Based on current data trends, the DA is expected to increase by 3% to 4%, effective from July 2025. However, the official announcement is likely to come in September or October, ahead of the Diwali festive season.

The calculation of DA is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) averaged over the past 12 months.

• The AICPI-IW for May 2025 rose by 0.5 points to 144.

• It was 143 in March and 143.5 in April.

• If the index for June 2025 increases to 144.5, the 12-month average will reach approximately 144.17.

According to the 7th Pay Commission’s formula, this would result in a revised DA of around 58.85%, meaning a 4% hike from the current rate of 55%.

DA (%) is calculated using the formula:

DA (%) = [(Average AICPI-IW of last 12 months) – 261.42] ÷ 261.42 × 100

Here, 261.42 is the base index value. Based on current AICPI-IW trends from January to May 2025, a 3% increase is already evident. The final decision will depend on the June 2025 index, which is expected in early August.

Although the revised DA will be applicable from July 2025, the government traditionally announces such hikes around the festive season—usually between September and October. This time too, the announcement is expected just before Diwali.