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DA Hike for January 2026 Latest Update: Has Government Announced Dearness Allowance Increase? Central government employees and pensioners are eagerly waiting for the government's announcement regarding Dearness Allowance (DA) and Dearness Relief (DR) for January 2026. Usually, the government announces this before a big festival like Holi. But this time, even after Holi is over, there is still no news on DA and DR for government employees and pensioners. Let us discuss about it in detail…

DA increase for January 2026

The government announces DA hike twice a year – once for January and second for July. However, the announcement may not happen in the same month. This can happen before any big festival. But there is no fixed date for the announcement and they can delay it. For January 2026, the DA increase is likely to be 2%. It is calculated on the basis of 12-month average reading of All India Consumer Price Index Industrial Workers (AICPI-IW). DA for January 2026 was calculated after the December 2025 AICPI reading. However, how much DA will be will be known only after the government's announcement.

Why is it necessary to increase DA for government employees?

The increase in DA helps government employees to adjust their basic salary according to rising inflation. They get increase in DA as a percentage of their basic salary. The basic salary of an employee remains the same throughout the pay commission period and before the implementation of the next pay commission. During this time, DA is one of the most effective ways to increase salary. Pensioners get DR which increases the payment continuously twice a year.

How do AICPI-IW readings help decide DA hike?

AICPI-IW is a monthly index that measures relative changes in the retail prices of a fixed basket of goods and services used by industrial workers over a period of time. The Labor Bureau of the Finance Ministry releases monthly data. The 12-month average reading is used to calculate DA and DR for employees and pensioners across India.

Formula to calculate DA

DA% = [{AICPI-IW का 12 महीने का एवरेज (बेस ईयर 2001) 261.42}/261.42×100]

However, we have to first link the base value of 2016 to the base value of 2001 by multiplying it by 2.88.

The factor of 2.88 has been decided to make the latest base year (2016) equal to 2001. Labor Bureau data shows that for August 2020, the value of CPI-IW under the old base (2001=100) was 33.8 and CPI-IW under the new base (2016=100) was 117.4. Therefore the factor is calculated as 338 ÷ 117.4 = 2.88.

What is the AICPI-IW average inflation for the last 12 months?

According to December 2025 data, AICPI-IW was 148.2, which was 0.5 higher than November data. If we talk about 12 months average, then the average of AICPI-IW for (January 2025-December 2025) is 145.54.

What will be the estimated DA rate for January 2025?

If we put average inflation in DA calculation formula

Percentage DA will be = (145.54X2.88) 261.42}/261.42×100]

= 419.15-261.42/261.42X100

= 0.6033X100= 60.33%

Since the government takes round figures, 60.33% DA means 60%.

This means that DA will increase from the current 58% rate to 60%.

However, to know the actual DA increase we will have to wait for the government's announcement.