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Central government employees and pensioners may soon receive welcome financial relief ahead of Holi, as fresh inflation data indicates a possible 2% increase in Dearness Allowance (DA) and Dearness Relief (DR) effective from January 2026. If approved, this hike will lead to a direct boost in monthly salaries and pensions for millions across India.

The expectation comes after the Labour Bureau released the December 2025 AICPI-IW (All India Consumer Price Index for Industrial Workers) data, which suggests that the DA rate could rise from the current 58% to around 60%. While the final decision rests with the central government, current calculations strongly point toward a 2% increment.

What Is Dearness Allowance (DA) and Why Does It Matter?

Dearness Allowance (DA) is a cost-of-living adjustment paid to central government employees to offset the impact of inflation. It is calculated as a percentage of an employee’s basic salary and is revised twice a year — in January and July.

For pensioners, the same benefit is provided as Dearness Relief (DR), ensuring their purchasing power remains protected against rising prices.

Whenever DA increases, it automatically raises overall take-home salary and pension, making it one of the most important financial components for government staff.

How AICPI-IW Data Influences DA Calculation

The AICPI-IW index tracks changes in the prices of essential goods and services for industrial workers across India. The Labour Bureau publishes this data every month, and the average of the last 12 months is used to determine DA rates.

For December 2025, the AICPI-IW index stood at 148.2, with a 12-month average of 145.54. Based on the officially accepted DA calculation formula, this figure indicates that DA could rise to approximately 60.33%.

Since the government generally rounds off DA to whole numbers, it is widely expected to announce 60% DA, implying a 2% hike over the current 58%.

Why January 2026 DA Is Expected to Touch 60%

Using the standard DA computation formula, experts estimate:

• Projected DA: 60.33%

• Current DA: 58%

• Expected increase: 2%

If approved, this revision will be effective from January 2026, although the official announcement may come in March 2026, just before the Holi festival — making it a timely financial boost for government staff and retirees.

How Much Will Salary Increase After 2% DA Hike?

A 2% DA increase may seem small, but it can significantly impact monthly income, especially for employees with higher basic pay.

Estimated Monthly Salary Impact

The higher the basic pay, the greater the financial benefit. Pensioners will also see a corresponding rise in their monthly Dearness Relief payouts.

Who Will Benefit from This DA Hike?

If implemented, the hike will benefit:

• Central government employees

• Defense personnel

• Railway employees

• Central government pensioners

• Family pension recipients

With inflation continuing to impact daily expenses, this increment will help ease financial pressure and maintain purchasing power.

Why This DA Hike Matters in 2026

The expected DA revision reflects:

• Stable inflation trends

• Government commitment to employee welfare

• Efforts to support household income amid rising living costs

Additionally, with upcoming economic changes and salary-related reforms, this hike could set the stage for further compensation adjustments in the future.

Final Word: Holi Gift for Government Staff?

Although the official government notification is still awaited, current inflation data strongly supports a 2% DA and DR hike from January 2026. If confirmed, this increase will offer timely financial relief to millions of government employees and pensioners — just in time for Holi celebrations.

Government staff are advised to stay updated with official announcements in March 2026, when the final DA decision is expected to be declared.