Current Dearness Allowance (DA) stands at 55% for employees, a figure that incorporates a 2% hike government-wide effective March 2025. Inflation trends now indicate that an additional DA adjustment is warranted.The DA is officially reassessed on a semi-annual cadence. Results for the first cycle, disclosed February-March, take effect retroactively from January. The subsequent cycle, communicated September-October, is effective from July. These reviews provide a compensatory mechanism against rising consumer prices, protecting the real income of serving employees. For pensioners, the equivalent leverage is Dearness Relief (DR). Decisions to revise either allowance are triggered by sustained upturns in the inflation rate.The computation of Dearness Allowance (DA) hinges fundamentally upon the All India Consumer Price Index for Industrial Workers (AICPI-IW). This index is derived from market price data collected from 317 centres across 88 industrial regions nationwide. The Labor Bureau under the Ministry of Labor publishes the index figures monthly. The DA recalculation for July 2025 will employ the CPI-IW averages of the preceding 12 months. The precise calculation adheres to the formula: DA (%) = [(12-month CPI-IW moving average — 261.42) ÷ 261.42] × 100 In this formula, the constant 261.42 serves as the index base established by the 7th Pay Commission. In March 2025, the CPI-IW stood at 143; it subsequently rose to 144 by May. Should the index hold stable or record a modest rise in June, a DA increase of 3 to 4 per cent therefore becomes a highly probable outcome.Rural inflation shows a modest easing, though consequences for workers remain circumscribed.The May 2025 release indicates a small decline in rural inflation, as measured by the CPI-AL for agricultural labourers and the CPI-RL for rural workers. The CPI-AL has dropped to 2.84% and the CPI-RL to 2.97%, compared to a figure above 3.5% in April. These declines, while noteworthy, merely indicate trend direction; they do not inform the direct computation of the Dearness Allowance.Nevertheless, should the CPI-IW hold steady in June, the government might soon implement a 3-4% upward revision of the DA, pushing its overall level to 58% or 59%.
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