Like a tide guided by unseen moons, inflation’s math nudges salaries upward once again.
DA Set to Rise as Inflation Index Holds Firm
Central government employees and pensioners are likely to see a fresh boost in dearness allowance (DA), with a proposed hike of 5 percentage points, taking the total DA to 63 percent. This follows the Ministry of Labour and Employment’s decision to retain the All India Consumer Price Index for Industrial Workers (AICPI-IW) at 148.2 for December 2025.
The AICPI-IW is the core metric used to adjust DA, ensuring that salaries and pensions keep pace with rising prices. “With the Centre keeping the AICPI-IW index unchanged at 148.2, the dearness allowance will be raised by 5 percent. This means the DA will be hiked 63 percent,” said Manjeet Singh Patel, president of the All India NPS Employees Federation.
The revision is scheduled for January 2026 under the biannual DA cycle. Earlier, the government had raised DA from 54 percent to 58 percent in July 2025. As per established practice, the Centre is expected to formally implement the hike in March or April 2026, with arrears paid from January and reflected in April salaries.
The calculation underpinning the hike follows a standard formula, which, based on the 12-month AICPI-IW average, results in a DA figure of exactly 63 percent—translating into a net 5 percent increase over the current rate.
Transport Allowance Boost and Renewed Merger Demands
Alongside DA, transport allowance will also rise by the same percentage. Under the 7th Pay Commission framework, transport allowance varies by pay level and city category—X, Y or Z—with higher rates for metro postings. The allowance is paid as a fixed sum, with DA layered on top. Employees at Level 14 and above who forgo official cars receive Rs 15,750 monthly, while employees with disabilities are entitled to double the applicable allowance.
For instance, a Pay Level 5 employee in a Y-category city with a base transport allowance of Rs 1,800 will see it increase by Rs 1,134 once DA reaches 63 percent, taking the total to Rs 2,934.
Employee unions have renewed calls to merge DA with basic pay ahead of the 8th Pay Commission. “Employees are eagerly awaiting immediate relief, and the government should consider merging the existing DA with basic pay. With DA already trailing inflation and gold prices continuing to surge, such a move would offer much-needed support,” said Patel. However, the government has reiterated its stance: “No proposal regarding merger of the existing dearness allowance with the basic is under consideration with the government at present,” Pankaj Chaudhary stated in a written Lok Sabha reply on December 1, 2025.
And so, like a measured drumbeat, policy marches on—steady, calculated, and tethered to the pulse of prices.
Summary
Central government employees may receive a 5 percent DA hike, raising the total to 63 percent, after the AICPI-IW index stayed at 148.2 for December 2025. The hike, due from January 2026, is likely to be implemented by April with arrears, alongside a matching rise in transport allowance.
