The Modi government is set to give a welcome pre-Diwali financial boost to over 12 million central government employees and pensioners with a 3 percent increase in Dearness Allowance (DA). This announcement, expected in early October 2025, marks the final DA revision under the 7th Pay Commission, which concludes at the end of this year.
Dearness Allowance is a cost-of-living adjustment paid to government employees to offset the impact of inflation. With the DA rate rising from the current 55 percent to 58 percent, this revision will positively impact roughly 48 lakh employees and 66 lakh pensioners across India, providing much-needed relief amid continuing inflation.
For example, a government employee with a basic salary of Rs 50,000 can expect their monthly DA component to rise from Rs 27,500 to Rs 29,000, leading to an increase in take-home pay by Rs 1,500. Pensioners will similarly benefit, seeing monthly Dearness Relief rise by about Rs 900 on a Rs 30,000 basic pension.
The DA hike will be calculated based on the latest Consumer Price Index for Industrial Workers (CPI-IW) data, which averaged 143.6 between July 2024 and June 2025. The official DA rate of 58 percent aligns with the CPI trends during this period.
The government traditionally revises DA twice annually—before Holi for the January-June period and before Diwali for the July-December period—ensuring timely support for employees during key festive seasons. Arrears covering July to September will be paid with salaries in October, adding to the festive cheer.
This hike holds particular importance as it closes the chapter on the 7th Pay Commission, which came into effect in 2016 and ends this year. The 8th Pay Commission was announced earlier this year but is yet to be fully constituted. Its recommendations and implementation are expected by late 2027 or early 2028, meaning government employees will continue with their current pay structure in the interim.
With inflation still impacting household budgets, the DA increase provides a vital cushion for millions dependent on fixed incomes. The Modi government’s timely action reflects its commitment to supporting central government workforce welfare during challenging economic times.
This final DA revision under the 7th Pay Commission is not just a routine financial adjustment but a meaningful gesture ahead of the festive season and a bridging measure before the new pay commission framework takes over.
Reviewed by Aparna Decors
on
September 06, 2025
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