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  5. 8th Pay Commission: Dearness Allowance increase in July could be low before 8th CPC; here's why

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8th Pay Commission: Dearness Allowance increase in July could be low before 8th CPC; here's why

Upstox
By Upstox News Desk

3 min read | Updated on June 18, 2025, 12:45 IST

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SUMMARY

The Government increases the dearness allowance with effect from two dates in a year: January 1 and July 1. This is done as per the recommendation of the 7th CPC. Ahead of the 8th Pay Commission, only a moderate hike in DA is expected.

8th pay commission da hike

DA hike before 8th Pay Commission could be moderate. | Image source: Shutterstock

While the 8th Central Pay Commission (CPC) is yet to be officially set up, Central Government employees are expecting another increase in Dearness Allowance (DA) effective from July 1, 2025.

If announced, this could be the last increase in DA before the 8th Pay Commission comes into force. However, employees should expect only a moderate increase in DA in the wake of falling inflation rates.

The retail inflation in India recently hit an over 6-year low as the Consumer Price Index (CPI) fell to 2.82% in May from 3.16% in April. The CPI rate in May was the lowest since 2.57% recorded in February 2019.

According to the National Statistics Office (NSO), the decline in CPI was driven by a sharp fall in food inflation due to lower prices of pulses, vegetables, fruits, cereals, eggs, sugar, and household goods.

Declining retail inflation augurs well for households as they can save more on daily expenses. For Central Government employees, however, this could result in only a moderate or low increase in dearness allowance.

Earlier, the AICPI-IW data had increased slightly, boosting the chance for a higher DA hike.
The Central Government pays DA to its employees as a certain percentage of their basic salaries. This helps employees in combating the impact of inflation on the purchasing power of their salaries. Currently, the rate of DA is 55% of basic salary.

Generally, the Government increases the dearness allowance with effect from two dates in a year: January 1 and July 1. This is done as per the recommendation of the 7th Pay Commission.

When to expect the DA hike announcement?

The announcement of a hike in DA is not always done in January and July.

It has been seen in the past that the government announces the first DA hike of the year around the festival season in March, and the second hike is announced around another festival season in September-October. This means the next DA hike announcement may not happen next month. But whenever it happens, it will be implemented retrospectively from July 1.

Meanwhile, it seems there is a delay in the formation of the 8th Pay Commission. The Government is yet to finalise names for various posts in the pay panel. While a formal decision on the Terms of Reference and the names of members, including the chairperson, of the 8th CPC is yet to be made, the government recently extended the last date of application for various key posts in the upcoming pay commission.
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About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.