7th Pay Commission: Shock for central employees, next DA hike will be less than 2%! Know the full reason

7th Pay Commission: Dearness Allowance is a special allowance, which gives relief to central and state government employees and pensioners from rising inflation. This allowance is changed by the government twice a year, first in January and second in July.

DA Hike News: If you yourself are a central employee or someone in your family works in the central government, then this news is for you. According to a new update, about 1.25 crore employees and pensioners will be disappointed after reading this news. Recently, the government had announced an increase of 2% in Dearness Allowance (DA) and Dearness Relief (DR), which increased it to 55%. This increase in DA was the lowest in the last 78 months (about six and a half years). But now, due to reduction in inflation in the first three months of 2025, the next DA hike may be less than 2% or zero.

Last DA hike of 7th Pay Commission

This news will disappoint those employees and pensioners who were expecting a good DA hike for July-December 2025. This will be the last DA hike of the 7th Pay Commission, as the 10-year term of the Pay Commission is ending on 31 December 2025. The formation of the Eighth Pay Commission was approved by the government recently. The new Pay Commission will make recommendations related to the salary hike of central employees.

What is Dearness Allowance (DA)?

Dearness Allowance is a special allowance given to central and state government employees and pensioners to reduce the impact of rising inflation. This allowance is revised twice a year, first in January and second in July. The first hike is usually announced in the month of March and the second hike in the month of October/November. DA is calculated on the basis of the All India Consumer Price Index (AICPI-IW). This index helps in maintaining the real income of the employees.

Reason for reduction in DA hike

AICPI-IW data has seen a decrease in the first two months of 2025, due to which DA hike for July-December 2025 may be reduced. AICPI-IW is an important parameter for calculating DA hike. According to the latest data from the Labor Bureau under the Labor Ministry, the AICPI-IW fell by 0.4 points to 142.8 in February 2025, while it was 143.2 in January 2025.

On a year-on-year basis, the inflation rate fell to 2.59% in February 2025, it was 4.90% in February 2024. Experts believe that the AICPI-IW may come down further in March and April. The CPI-based retail inflation rate reached a five-year low of 3.34% in March 2025, while it was 3.61% in February.

How is DA calculated?

DA is calculated on the basis of the average of AICPI-IW. This index is released every month by the Labor Ministry. If this index is low, then the DA hike also decreases. If the decline in AICPI-IW continues for the next four months, then employees may get less than 2% or zero DA hike. This will have a direct impact on the income of employees and pensioners. DA is an important part of salary and pension. If there is no increase in DA, then the purchasing power of the employees may be affected. It can also affect their savings and lifestyle.

Future of 7th Pay Commission

The 7th Pay Commission is ending in December 2025. In such a situation, employees and pensioners are waiting for the announcement of the 8th Pay Commission. If the hike in DA is less, then the hopes of the employees will be pinned on the new Pay Commission. However, the government has not yet made any official announcement regarding the formation of the 8th Pay Commission. Central employees have been demanding a good increase in DA for a long time. Their demand is that the government should adjust DA according to inflation.

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