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DA Hike January 2026: Central Govt Likely To Receive 2% Increase In Dearness Allowance
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DA Hike January 2026: The Union Cabinet is expected to clear the DA revision in early March 2026, possibly in the first or second week, ahead of Holi.
DA Hike January 2026: If 2% hike approved, DA and dearness relief (DR) will rise from the current 58% to about 60% of Basic Pay.
DA Hike January 2026: Central government employees and pensioners are likely to see only a marginal increase in dearness allowance (DA) from January 1, 2026, with the hike expected to be capped at 2%. If approved, DA and dearness relief (DR) will rise from the current 58% to about 60% of Basic Pay, marking a restrained start to the 8th Pay Commission phase.
The Union Cabinet, headed by Prime Minister Narendra Modi, is expected to clear the DA revision in early March 2026, possibly in the first or second week, ahead of Holi. This will also be the first DA hike after the formal conclusion of the 7th Pay Commission on December 31, 2025.
Inflation numbers leave little room for a higher DA
The final DA calculation hinges on the All-India Consumer Price Index for Industrial Workers (CPI-IW) for December 2025, released by the Labour Bureau. The index remained unchanged at 148.2 points, mirroring the November reading.
With December data in place, the 12-month average CPI-IW for the July–December 2025 period stands at 419.17 points. Applying the existing 7th Pay Commission formula, the DA works out to 60.34%. Following established convention, the government is expected to drop the decimal and notify DA/DR at 60% with effect from January 1, 2026.
Smallest increase seen in several years
A 2% DA hike is relatively uncommon and has been witnessed only a few times in the past decade. The last such low increases were recorded in July 2018 and January 2025.
As a result, the upcoming January 2026 revision will be among the lowest DA hikes in more than seven years, even though inflation has remained elevated rather than easing sharply.
A transition-period DA hike with long-term consequences
The January 2026 DA revision carries greater weight than usual because it comes during a transition between two pay commissions. The 7th Pay Commission has completed its tenure, while the 8th Pay Commission, though constituted, is still in the early stages of its work.
There is no clarity yet on when the 8th Pay Commission’s recommendations will be implemented. With the commission having up to 18 months to submit its report — and the government typically taking additional time to examine it — actual pay and pension revisions may only come by late 2027 or early 2028.
Why slower DA growth is worrying employees
Employee unions are increasingly concerned that subdued DA increases now could limit salary revisions later. When a new pay commission is implemented, the prevailing DA is usually merged into Basic Pay, and DA is reset to zero.
With DA expected to touch only 60% in January 2026 and rise gradually thereafter, the quantum available for merger under the 8th Pay Commission could remain modest. This is why expectations around the fitment factor are now more conservative, with estimates clustering around 1.60.
Lower DA at the time of merger can permanently cap revised Basic Pay and pensions, making even small differences in DA levels significant over the long term.
DA revisions before 8th CPC will set the base
The DA hikes due in January 2026, July 2026, January 2027 and July 2027 will collectively determine the DA level that eventually gets merged into pay when the 8th Pay Commission structure is rolled out.
This makes the January 2026 hike, despite being limited to 2%, an important building block for future salary and pension calculations.
Unclear rollout timeline adds to anxiety
In earlier pay commission transitions, implementation timelines were more predictable. The 7th Pay Commission, for instance, came into effect from January 1, 2016, immediately after the end of the 6th Pay Commission.
This time, the government has not committed to any effective date for the 8th Pay Commission. A question raised in Parliament during the Winter Session on whether revised pay scales would be applicable from January 1, 2026 did not elicit a clear response, adding to fears of a prolonged gap period.
How DA is worked out
Dearness Allowance is designed to offset inflationary pressures on salaries and pensions. Under the 7th Pay Commission framework, DA is calculated using the formula:
DA (%) = (12-month average CPI-IW – 261.42) ÷ 261.42 × 100
DA is revised twice every year, in January and July, based on CPI-IW trends.
February 08, 2026, 13:53 IST
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