India’s Labour and Employment Ministry has released the latest AICPI-IW index for 2025, the key benchmark used to calculate Dearness Allowance (DA) for central government employees. The data has fuelled expectations of a salary hike ahead of the Holi festival, with signs pointing to a possible increase in DA and Dearness Relief (DR) from January 2026. If approved, the move would benefit not only serving employees but also retired central government staff, offering timely relief amid rising living costs.
DA Hike Likely Before Holi
Based on the December 2025 AICPI-IW figures, the government is expected to announce a 2 percent increase in Dearness Allowance and Dearness Relief. Officials typically declare the January DA revision before March, raising hopes that the announcement could come by late February or early March-just ahead of Holi on March 4.
The December 2025 AICPI-IW stood at 148.2, taking the 12-month average to 145.54. On this basis, the DA calculation works out to roughly 60.33 percent. Since the current DA stands at 58 percent, a 2 percent rise is widely anticipated. Traditionally, the government rounds off DA figures, which could see the allowance settled at 60 percent.
Importantly, this hike would apply equally to pensioners, for whom the allowance is termed Dearness Relief and revised in line with DA rates.
How AICPI-IW Drives DA Calculation
The AICPI-IW, or All India Consumer Price Index for Industrial Workers, tracks changes in prices across a basket of goods and services. It is released monthly by the Ministry of Labour and Employment and forms the backbone of DA calculations for central government staff.
Even though the term of the 7th Pay Commission ended on December31, 2025, DA continues to be calculated on the existing basic pay until the recommendations of the next pay commission are implemented.
Earlier, based on June 2025 data, the government had raised DA by 3 percent in October 2025, taking it from 55 percent to 58 percent. This time, a smaller 2 percent hike is expected.
If approved, the increase would translate into tangible gains. Employees with a basic salary of Rs 20,000 a month would see a rise of Rs 400, while those earning Rs 30,000 would gain Rs 600. For staff with a basic pay of Rs 1 lakh, the monthly increase would be around Rs 2,000-welcome news as the festive season approaches.
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