8th Pay Commission: How much can DA rise for Central government employees if December CPI-IW matches November levels?

Dearness Allowance

• AICPI-IW for Nov 2025 is 148.2, key for DA revision for central govt employees
• DA hike in Jan 2026 likely to be 3-5%, pending Dec 2025 AICPI-IW data
• 8th Pay Commission to recommend fitment factor after 18 months from Nov 2025

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The Ministry of Labour and Employment has released the All India Price Index for Industrial Workers (AICPI-IW) for November 2025 at 148.2. This data is crucial to revise the dearness allowance for central government employees to protect basic pay, or pension, from erosion in real value on account of inflation.

The next revision of the dearness allowance is scheduled in January 2026, following the routine six- monthly update. The government raised the DA from 54% to 58% in July 2025. Now the central government employee association thinks that the upcoming DA will likely be raised by 3-5%, supposedly taking 147 to 148 as the December AICPI-IW.

“Assuming December’s AICPI-IW at 147, the dearness allowance for central government employees is likely to be 3%,” said Manjeet Singh Patel, president of the All India NPS Employees Federation.

How is dearness allowance for central government employees calculated?

Patel said that if December’s AICPI-IW is assumed at November 2025’s level, the dearness allowance would rise by 5%.

He illustrates using the official calculation method for dearness allowance:

DA (%) = [{(Average AICPI-IW of last 12 months × 2.88) − 261.41} / 261.41​] × 100 − Existing DA (%)

148.2 × 2.88 = 426.81

426.81 - 261.41 = 165.4

165.4 ÷ 261.41 = 0.63

0.63 × 100 = 63.00

63 - 58 = 5%

In the next example, Patel assumed December’s AICIP-IW at 146, the dearness allowance would rise by around 3%.

147 × 2.88 = 423.36

423.36 - 261.41 = 161.95

161.95 ÷ 261.41 = 0.61

0.61 × 100 = 61

61 - 58 = 3%

Assuming a 3-5% hike in dearness allowance, the central government employees could see DA jump from 54% to 61-63%.

These examples are only for illustrative purposes. The exact DA hike for January 2026 can be determined when the Labour Ministry releases the AICPI-IW data for December 2025.

Then, following the routine practice, the Centre will likely announce the DA for January 2026 in March-April 2026.

So far, there hasn’t been any change in the salary of central government employees, even though the 7th Central Pay Commission officially ended on December 31, 2025.

The 8th CPC will recommend the fitment factor, which is key to determining the next raise in employees’ basic salary component, after 18 months of its formation in November 2025.

The dearness allowance would reset to zero and be merged with basic pay only when the fitment factor is implemented.

Patel had earlier suggested a different approach, one that avoids a complete DA reset, which would better protect employees’ purchasing power during a period of high inflation.