The All India Consumer Price Index for Industrial Workers (AICPI-IW) for November 2025 has moved the 12-month average close to the next DA threshold, making a hike largely certain.
Central government employees and pensioners across
India are watching closely as fresh inflation data suggests a rise in dearness allowance (DA) from January 2026. The Ministry of Labour and Employment has released the All India Consumer Price Index for Industrial Workers for November 2025, which plays a central role in calculating dearness allowance and dearness relief.
The index for November stands at 148.2 and feeds directly into the six-monthly revision process. This revision is scheduled to take effect from January 1, 2026.
What employees can expect going ahead
Central government employees and pensioners can expect a dearness allowance increase from January 1, 2026, with calculations indicating that the rate is set to cross the 60% mark. Based on the inflation data available up to November 2025, the hike is likely to be at least 2 percentage points, taking DA from 58% to 60%. This increase will be reflected in salary and pension payments once the government issues its formal notification.
If the December 2025 inflation index remains close to recent levels, the increase could be higher. Projections suggest that DA may rise further depending on the final index reading. While the revised rate will be effective from January, employees should expect the official announcement a few months later, with arrears paid for the intervening period as per past practice.
Inflation index moves close to next DA level
The consumer price index is designed to shield salaries and pensions from the impact of rising prices. The November reading has pushed the 12-month average of the index close to the next dearness allowance threshold.
Under the standard formula used by the 7th Central Pay Commission, dearness allowance had reached 59.93% by November 2025. This places it just below the 60% level, with only the December inflation data yet to be released.
January hike appears largely certain
Scenario-based estimates indicate that even if the December index moves within a normal range, the calculated dearness allowance will remain above 60%. Since the government announces dearness allowance only in whole numbers, this suggests a likely rise of 2 percentage points, from 58% to 60%, effective January 2026.
Employee associations have said the increase could be higher if December inflation remains elevated.
Employee groups flag possibility of bigger increase
Manjeet Singh Patel, president of the All India NPS Employees Federation, said that if the December index stays close to November’s level, the dearness allowance hike could range between 3% and 5%.
Estimates show that if the December index falls around 146–147, dearness allowance could reach 61%. If it stays closer to 148, it could rise to 63%. These figures remain indicative and depend on the Labour Ministry’s final December data.
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The government last revised dearness allowance in July 2025, raising it by 4 percentage points from 54% to 58%. Although the new rate will apply from January 1, 2026, the official announcement is expected in March or April 2026, after the December index is released. Any arrears are usually paid retrospectively.
Pay commission backdrop and future revisions
There has been no change in basic pay from January 2026, as the 7th Central Pay Commission ended on December 31, 2025. The 8th Pay Commission, notified in November 2025, is expected to submit its recommendations after 18 months.
Its report will decide the fitment factor, which will guide the next major revision of salaries and pensions. Under current rules, dearness allowance is merged into basic pay and reset to zero only when the new fitment factor is implemented.
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