Central government employees and pensioners are anticipating a second dearness allowance hike during this festive season, with hopes for a 3-4% increase based on recent AICPI-IW data trends. According to Mint, there was earlier 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, but the announcement was delayed. Diwali celebrations in November are expected to coincide with the traditional festive season announcement, following past precedents when the Centre cleared DA hikes during Diwali in both 2024 and 2025. In October 2025, Union Labour Minister Ashwini Vaishnaw announced a 3% DA hike, increasing the component to 53% of basic pay.
The Finance Ministry announced a significant dearness allowance increase in April 2026, raising DA from 58% to 60% of basic salary, effective from 1 January 2026. According to reports from Mint, this revision affects over 1 crore beneficiaries, comprising approximately 50 lakh central government employees and about 65 lakh pensioners, including defence and railway personnel and retirees. The Indian Banks' Association (IBA) subsequently announced revised DA and DR for workmen and officer employees across levels for May, June and July 2026, with basic salaries ranging from ₹48,000 to ₹1,17,000 and DA amounts from ₹435 to ₹1,050. As per Mint, DA is calculated using the 12-month average of the Labour Bureau's All India Consumer Price Index for Industrial Workers (AICPI-IW) as prescribed by the 7th central pay commission.
Andhra Pradesh approved a 4.55% combined DA hike for state government employees, local body personnel and university staff, effective from September 2026. As reported by Mint, the first installment of 2.73% hike takes DA from 37.31% to 40.04% of basic pay retroactively from July 2024, while the second installment of 1.82% increases DA from 40.04% to 41.86% retroactively from January 2025. Arunachal Pradesh implemented a 2% DA hike effective from 1 January 2026, benefiting 69,248 regular employees. Assam approved a 2-percentage-point increase from 58% to 60% with immediate effect, benefiting more than 8 lakh serving state government employees and pensioners.
DA hikes are calculated based on the AICPI's 12-month average, using the method prescribed by the 7th Central Pay Commission. The formula for central government employees is DA percentage = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 261.42) / 261.42] x 100. Recent AICPI-IW data shows the index increased by 1.3 points to 153.2 in July 2026, up from 151.9 in June, 150.8 in May, 149.9 in April, and 149.1 in March. Inflation for July 2026 stood at 4.57% year-on-year compared to 2.66% in July 2025. With DA at 60% since January 2026, the estimated increase comes to around 3.7%, though the government generally rounds off final figures, which may eventually result in a 3-4% DA hike.
Tamil Nadu announced a 2% DA hike for state government employees, pensioners and teachers, effective from 1 January 2026, requiring an additional annual expenditure of ₹1,230 crore. According to Mint, Uttar Pradesh announced a 2% hike benefiting around 16 lakh employees, teachers and pensioners, while West Bengal implemented a 20% DA hike for employees and pensioners under the 5th CPC, taking DA to 223% from 171% effective from October. Maharashtra approved payment of ₹800 crore DA arrears for state government employees under various pay commissions for November and December 2025 and January 2026. The Indian Railways also announced a 2% DA and DR hike for its personnel following the central government's revision.
