DA Hike News – If you are a central government employee or someone in your family works in the public sector, this update is bound to hit close to home. Over 1.25 crore employees and pensioners may feel a wave of disappointment after hearing the latest development regarding Dearness Allowance (DA) and Dearness Relief (DR).
Recently, the government approved a 2% increase in DA, pushing it to 55%. However, this hike was the lowest in the past 78 months, nearly six and a half years. Now, due to declining inflation in the first quarter of 2025, the next DA hike—expected in July—may be less than 2% or even zero. This has understandably raised concern among employees hoping for some financial relief.
Last DA Hike Under 7th Pay Commission
But the update comes as a damper for those anticipating a big jump in the July-December 2025 period. And the reason? This would likely be the last DA increase under the 7th Pay Commission, which is set to expire after 31 December 2025. The government has already given indications of an 8th Pay Commission that will recommend a new pay structure.
Explaining the Diminishing DA Upsurge
The largest factor of the abatement in the increase is the decline in the AICPI-IW data. The index was at 143.2 in January 2025 and has since then decreased to 142.8 in February 2025 with an overall decrease of 0.4 points. The consumer price index indicates that year-on-year inflation for February was pegged at 2.59%, as against 4.90% in the same month of 2024.
Why the DA Hike is Shrinking
Experts estimate that this downward trend might go on into March and even April 2025, affecting the overall final DA increase figure. Furthermore, retail inflation as per CPI reflected a 5-year lowest 3.34% in March 2025 as compared to 3.61% in February.
How is DA Calculated?
The DA percentage is derived from the average of the AICPI-IW index over a six-month period. If this average falls or stays stagnant, the hike also sees minimal or no increase. Should this trend continue over the next few months, employees might receive less than a 2% DA hike—or none at all.