Central government employees and pensioners may get a 2% Dearness Allowance hike. (Photo: Canva)
Central government employees and pensioners are likely to see a modest hike in Dearness Allowance (DA) in January 2026, even as the 7th Pay Commission nears its end. While expectations were high, recent reports suggest the increase may be limited.
As per reports, the Dearness Allowance is expected to rise by 2% in January 2026. If approved, DA will increase from the current 58% to 60% of basic pay. This would mark the lowest DA hike in the past seven years, though a similar 2% hike was also granted in January earlier this year.
Dearness Allowance is calculated as a percentage of an employee’s basic pay. Even a 2% increase will marginally boost monthly salaries and pensions.
For instance:
An employee with a basic pay of ₹30,000 will see DA rise from ₹17,400 to ₹18,000 an increase of ₹600 per month.
For a basic pay of ₹50,000, the monthly DA increase would be around ₹1,000.
While the hike is modest, it continues to provide inflation-linked relief to employees and pensioners.
DA is calculated based on the All-India Consumer Price Index for Industrial Workers (AICPI-IW). After factoring in inflation data from recent months, especially November and December, the projected DA hike for January 2026 stands at around 2%, indicating relatively stable inflation levels.
The tenure of the 7th Pay Commission ends on December 31, 2025. Although the 8th Pay Commission has been announced, it is expected to take time before its recommendations are finalised and implemented.
Experts say the 7th Pay Commission framework including DA, HRA and TA will continue until the new pay commission comes into effect.
The 8th Pay Commission, headed by Justice Ranjana Desai, is expected to submit its report within 18 months. After submission, the government may take another 6-8 months to implement the recommendations. As per estimates, the new pay structure may come into force by 2027.
There is no proposal to stop DA payments after January 2026. Until the 8th Pay Commission is implemented, DA revisions will continue under the 7th Pay Commission structure.
Recently, the central government dismissed viral social media claims suggesting that DA hikes and post-retirement benefits for pensioners would be stopped under the Finance Act 2025.
In a PIB Fact Check, the government clarified that such claims are fake. DA hikes and pay commission benefits for pensioners will continue and can only be withdrawn in cases of dismissal due to misconduct, as per amended CCS (Pension) Rules, 2021.
Dearness Allowance is a key component of a government employee’s salary, designed to offset the impact of inflation and protect purchasing power. It is revised twice a year in January and July based on inflation trends.
Despite the expected low hike in 2026, DA continues to remain a crucial financial cushion for government employees and pensioners amid rising living costs.
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Sofia Babu Chacko is a journalist with over five years of experience covering Indian politics, crime, human rights, gender issues, and stories about marginalized communities. She believes that every voice matters, and journalism has a vital role to play in amplifying those voices. Sofia is committed to creating impact and shedding light on stories that truly matter. Beyond her work in the newsroom, she is also a music enthusiast who enjoys singing.
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