There may be a big and relief news for central employees and pensioners in the coming days. Once again, there is every possibility of a huge increase in the Dearness Allowance (DA) given under the 7th Pay Commission.
Based on the All India Consumer Price Index-Industrial Workers (AICPI-IW) data till June 2026, it is estimated that the DA of central employees may increase from the current 60 percent to 63 percent. However, this is still a strong estimate and the final decision will come only after the formal approval of the Central Government and the official announcement of the Finance Ministry.
Estimates strengthened by AICPI-IW data
The determination of dearness allowance of central employees is directly linked to the inflation figures in the country. For this, the average of the last 12 months of the AICPI-IW index released by the Labor Bureau is used.
The AICPI-IW index has been recorded at 151.9 in the data for June 2026. After this the average of the last 12 months has reached 148.65. When DA is calculated on the basis of this average, this figure comes out to be approximately 63.76 percent. Since the government does not implement DA in decimals and it is implemented in integers, there is a strong possibility that DA may be fixed at the level of 63 per cent.
How much DA is being received now?
Earlier in January 2026, the Central Government had increased the dearness allowance of central employees by 2 percent, after which the DA increased to 60 percent.
Now if there is an additional increase of 3 percent as per the estimate, then the total DA of the employees will increase to 63 percent. This increase will have a direct impact on the take-home salary of the employees every month. Along with this, if it is implemented from July 2026, then the employees can also get the arrears of the previous months in lump sum.
This benefit will be available only under the 7th Pay Commission
Even though the Central Government has taken steps towards the formation of the 8th Pay Commission, until its recommendations are fully implemented, the salaries and allowances of the central employees will be determined as per the rules of the 7th Pay Commission. Therefore, this possible DA increase will also be given as per the rules of 7th Pay Commission.
How does this mathematics of DA work out?
The 12-month average of AICPI-IW is used to decide dearness allowance. The formula to calculate DA is as follows:
$$\text{DA \%} = \frac{(12 \text{Month Average AICPI-IW} \times 2.88) – 261.42}{261.42} \times 100$$
The average AICPI-IW till June 2026 is considered to be 148.65. According to mathematical calculations:
148.65 × 2.88 = 428.12
428.12 – 261.42 = 166.70
(166.70 ÷ 261.42) × 100 = 63.76%
After this calculation, DA is considered to be approximately 63 percent by rounding off.
What does the 2.88 factor mean?
The main function of the 2.88 factor used in DA calculation is to reconcile the old and new AICPI-IW indices. Due to the difference in indices between the 2016 base year and the 2001 base year, this 2.88 factor is used to bring the two figures on the same scale.
How much will your salary increase with a 3% increase?
If 3 percent increase in DA is approved, its benefit will vary according to the basic pay of the employee:
- Pay Level-1: For employees whose minimum basic pay is Rs 18,000, their dearness allowance will increase by about Rs 540 per month.
- Pay Level-10: Whereas employees with basic pay of Rs 56,100 will get a direct benefit of about Rs 1,683 every month.
If this new rate is implemented from July 2026, then the employees will also get the benefit of the arrears amount. However, the actual increase and the amount of arrears will depend on the basic pay of the employee, the date of implementation and the details of the government order.
Now waiting for the official announcement from the government
At present, expectations among lakhs of employees regarding increase in DA have increased considerably. AICPI-IW figures are clearly pointing towards this increase, but the final approval will be given only in the cabinet meeting of the central government. Only after getting the approval of the government, it will be clear how much DA will actually increase and from which month this increased money will start coming into the accounts of the employees. Lakhs of central employees and pensioners will keep an eye on the official announcement of the Finance Ministry in the coming days.