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New Delhi: Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2026-27 tomorrow. This will be the ninth consecutive budget presentation by Sitharaman. In the Union Budget 2026 the middle classs biggest hope rests on a restructuring of income tax slabs. Rising inflation over the past few years has strained household budgets and keeping this in mind experts believe that Finance Minister Nirmala Sitharaman may increase the slab limits. Amid all the discussions a major update has emerged for the Central Government employees regarding the Dearness Allowance (DA). The Central Government revises DA twice every year and the way is now clear for an increase effective from January. It is important to note that any hike in DA is decided only after the release of the AICPI-IW index (All India Consumer Price Index for Industrial Workers) data. This data has now been released and based on it the final decision on the DA hike is taken. Notably the Modi government has kept the AICPI-IW index unchanged at 148.2 for December 2025 the same level as in November. In view of this it is now being speculated that the government may announce the maximum possible increase in Dearness Allowance. Manjeet Singh Patel President of the All India NPS Employees Federation said The Central Government has kept the AICPI-IW index unchanged at 148.2 which means a 5 percent increase in Dearness Allowance is possible. This implies that DA will rise to 63 percent. DA Hike: How much will the Dearness Allowance increase? For central government employees the Dearness Allowance (DA Hike News) is likely to be increased by 5 percent With this the total Dearness Allowance will rise to 63 percent. The revision of Dearness Allowance is scheduled for January 2026 as part of the biannual revision cycle. Earlier in July 2025 the government had increased DA from 55 percent to 58 percent. How is the percentage increase in Dearness Allowance calculated? The All India Consumer Price Index for Industrial Workers (AICPI-IW) is a key input for revising Dearness Allowance for central government employees and pensioners. This data is used to determine the exact percentage increase in DA. The following formula is used to calculate the DA hike: DA (percent) = [{(Average AICPI-IW of the previous 12 months × 2.88) − 261.41} / 261.41] × 100 − Existing DA (percent)