DA news: Can employees expect a second dearness allowance hike this year during festive season?

Central government employees and pensioners are expecting a second dearness allowance hike announcement during the festive season this year. There was hope earlier that a DA hike would come in July, amid rising inflationary pressures.

DA and dearness relief (DR) are a component of basic pay, given to employees and pensioners respectively, with aim to offset cost of living expenses on households. It is reviewed twice annually, with new announcements made in March and October, followed by rollouts in January and July.

Why do employees, pensioners expect second DA hike?

There was hope that a hike would come in July following monthly data release from the Labour Bureau’s All-India Consumer Price Index for Industrial Workers. It measures inflation by tracking fluctuations in the retail prices of goods and services consumed by industrial workers across 317 markets in 88 key industrial centres in India.

Notably, AICPI-IW numbers for July 2026 increased by 1.3 points to stand at 153.2, as per the Bureau. The index has been on a steady increase this year — at 151.9 in June, 150.8 in May, 149.9 in April, and 149.1 in March. Further, inflation for the month of July 2026 stood at 4.57% year-on-year (YoY) as compared to 2.66% in July 2025, as per an official release from the Ministry of Labour and Employment.

How would AICPI-IW reflect in DA calculation?

Notably, DA hikes are calculated based on the AICPI’s 12-month average, using the method prescribed by the 7th Central Pay Commission (CPC). Thus, steady increase in numbers is likely to impact the DA and DR calculations.

• For central government employees: DA percentage = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 261.42) / 261.42] x 100
• For public sector employees: DA percentage = [(Average of AICPI (Base Year 2001 = 100) for the last three months – 126.33) / 126.33] x 100

DA percentage = (148.63 × 2.88 − 261.33) / 261.33 × 100

= (428.05 − 261.33) / 261.33 × 100

= 192.84 / 261.33 × 100 = 63.7%

With DA at 60% since January 2026, the estimated increase comes to around 3.7%. The government generally rounds off the final figure, which may eventually result in a 3-4% DA hike, depending on whether the final number is rounded up or down.

Can we expect second DA hike in Diwali this year?

Diwali will be celebrated is in November this year, so following past trends, employees and pensioners are expecting a “Diwali gift” sometime in October or November. Further, based on AICPI-IW data trends, there are expectation of a 3-4% DA hike to counter inflation.

Hopes are also high based on past precedents in 2024 and 2025, when the Centre cleared DA hikes during Diwali in both those years. In October 2025, Union Labour Minister Ashwini Vaishnaw said the Cabinet cleared 3% DA hike, increasing the component to 53% of basic pay. The previous year too, in 2024, the government announced an increase ahead of the Diwali festive season.