DA Hike July 2025: Central Government Employees Likely To Receive 4% Hike In Dearness Allowance
7th Pay Commission: Even as central government employees are awaiting the constitution of the 8th Pay Commission, they are likely to receive at least one more dearness allowance (DA) hike under the current 7th Pay Commission. Going by the latest inflation numbers, the July 2025 DA hike for central government employees is likely to be at 4%.
The DA hike is announced twice a year in February-March and September-October, with retrospective effect from January and July each year, respectively. It helps employees offset the impact of inflation.
The current DA rate stands at 55% after a 2% hike was implemented in March this year.
DA is given to government employees, while DR is given to pensioners.
The hike in dearness allowance (DA) is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which is released monthly by the Labour Bureau. The government calculates the DA hike by averaging CPI-IW data for the preceding 12 months, and applying a specific formula under the 7th Pay Commission:
The figure 261.42 is the base CPI-IW average (2016 base year) set under the 7th Pay Commission.
While CPI-IW data till May 2025 is not fully consolidated, the latest inflation trends give a partial view of price pressures. According to the labour ministry, retail inflation for agricultural and rural labourers (measured via CPI-AL and CPI-RL) cooled in May 2025 to 2.84% and 2.97%, respectively, from over 3.5% in April. CPI-AL and CPI-RL dropped slightly to 1305 and 1319 points, showing a downward trend in rural inflation.
Although CPI-AL and CPI-RL are not directly used to calculate DA, they signal broader inflation trends that may be reflected in CPI-IW too. If CPI-IW stabilises or rises modestly in the coming months, the government might approve a DA hike of 3% to 4%, taking the allowance to 58% or 59%.
The final hike figure will be known only after CPI-IW data for June 2025 is released — by the end of July. Following this, the Union Cabinet typically approves the new DA rate in September and October, which is paid out with arrears from July.
7th Pay Commission DA Hike: How Much Will Salary Increase?
On a 3% DA hike, the salary of the entry-level central government employee, who has a basic salary of around Rs 18,000 per month, will increase nearly Rs 540 per month, effective from July 1, 2025.
If somebody's salary is Rs 30,000 per month and has Rs 18,000 as the basic pay, he or she now gets Rs 9,990 as dearness allowance, which is 53 per cent of the basic pay. However, after the expected 3 per cent hike, the employee will get Rs 10,440 per month, which is Rs 540 higher.
First Published:
July 21, 2025, 16:05 IST
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