DA Hike July 2025: What can be projected rise for employees with Rs 40,000-Rs 80,000 basic pays, for pensioners with Rs 15,000-45,000 basic pensions
DA Hike July 2025: Central government employees and pensioners eagerly wait for the dearness allowance (DA) and dearness relief (DR) hike. Any hike in DA and DR increases their payouts, helping their amounts keep pace with inflation. With the July 2025 DA hike next in line, know how salaries and pensions of central government employees can be impacted at 2 per cent and 3 per cent DA and DR hikes.
DA Hike July 2025: Dearness allowance (DA) for employees and dearness relief (DR) for pensioners are important aspects for them to see a hike in their monthly payouts. Every six months, these are means to help them keep pace with inflation. Specially at a time when the 8th Pay Commission is just around the corner, the DA hike is in focus as it is likely to be the second-last hike before the 8th Pay Commission recommendation implementation. The January 2025 DA hike was 3 per cent as the dearness allowance reached 55 per cent! As the next hike is in the offing, will it be 2 per cent or 3 per cent? How may it impact the salaries and pensions of central government employees and pensioners at different levels? Know in this write-up!
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(Disclaimer: These are projections. Actual calculations may vary.)
Importance of DA for employees
A DA hike is a biannual feature to increase the overall salary payment for central government employees. States follow suit and increase DA for their employees also. The DA is revised every six months to adjust employee monthly payouts with inflation. Employees get it over and above their basic salary. So, when a pay commission is established, the reading of DA starts from 0 and increases every 6 months.
Why DR is important for pensioners
During active service, an employee can get many allowances that help increase their overall income, but for a pensioner, it's mainly the basic pension that forms the major portion of their monthly payout. Other than that, they get DR. So every DR hike increases their overall pension amount.
How is DA calculated?
DA is calculated on the basis of the reading of the All India Consumer Price Index-Industrial Workers (AICPA-IW). The Labour Bureau of the Finance Ministry issues readings of AICPA-IW every month. For March 2025, it was 143; for February, it was 142.8, while for January, it was 143.2. On its basis, the DA is calculated through a formula.
DA calculation formula for central government employees
DA% = [(AICPI Average (Base Year 2001 = 100) for last 12 months – 115.76) ÷ 115.76] x 100
DA calculation formula for public sector employees
DA% = [(AICPI Average (Base Year 2001 = 100) for last 3 months – 126.33) ÷ 126.33] x 100
Will DA increase for July DA be 2% or 3%?
Based on the current readings, the DA rate is 57.09, but the AICPA-IW readings for April, May, and June are yet to come. The actual calculation for the July DA hike will be calculated after these readings are issued.
Calculation for story
We will calculate the estimated salary hikes at 2 per cent and 3 per cent DA hikes for employees with salaries of Rs 40,000, Rs 60,000 and Rs 80,000. For our calculation, we are not taking any other allowance.
We will also calculate the estimated pension hikes at 2 per cent and 3 per cent DR increases for pensioners with Rs 15,000, Rs 30,000, and Rs 45,000 basic pensions.
Impact of DA hike for employee with basic pay of Rs 40,000
Estimated current salary (at 55% DA)- Rs 62,000
Estimated revised salary (at 2% DA hike)- Rs 62,800
Estimated current salary (at 3% DA hike)- Rs 63,200
Impact of DA hike for employee with basic pay of Rs 60,000
Estimated current salary (at 55% DA)- Rs 93,000
Estimated revised salary (at 2% DA hike)- Rs 94,200
Estimated current salary (at 3% DA hike)- Rs 94,800
Impact of DA hike for employee with basic pay of Rs 80,000
Estimated current salary (at 55% DA)- Rs 1,24,000
Estimated revised salary (at 2% DA hike)- Rs 1,25,600
Estimated current salary (at 3% DA hike)- Rs 1,26,400
Impact of DR hike for pensioner with basic pension of Rs 15,000
Estimated current salary (at 55% DR hike)- Rs 23,250
Estimated revised salary (at 2% DR hike)- Rs 23,550
Estimated current salary (at 3% DR hike)- Rs 23,700
Impact of DR hike for pensioner with basic pension of Rs 30,000
Estimated current salary (at 55% DR hike)- Rs 46,500
Estimated revised salary (at 2% DR hike)- Rs 47,100
Estimated current salary (at 3% DR hike)- Rs 47,400
Impact of DR hike for pensioner with basic pension of Rs 45,000
Estimated current salary (at 55% DR hike)- Rs 69,750
Estimated revised salary (at 2% DR hike)- Rs 70,650
Estimated current salary (at 3% DR hike)- Rs 71,100