DA hike after August inflation data: Will dearness allowance rise to 65%? How it may impact salaries of Level 1-10 central government employees

After the Labour Bureau released the All India Consumer Price Index- Industrial Workers (AICPI-IW) for August 2026 today (Wednesday, September 30, 2026), the estimated Dearness Allowance (DA) for central government employees has reached 65% (of the basic pay).

As per a tweet from the Labour Bureau today (Wednesday, September 30, 2026), the AICPI-IW increased from 153.2 in July to 154.4 in August. This is an increase of 1.2 points.

“All-India Consumer Price Index for Industrial Workers (2016=100) for August, 2026 increased to 154.4 points from 153.2 points in July, 2026. The inflation during the month increased to 4.96 % from 4.57% in previous month,” says Director General, Labour Bureau said in a tweet.



The August AICPI-IW pushed the 12-month index average to 149.82, which took the DA to an estimated rate of 65.05%, based on a government formula. Since the government calculates DA in round figures, a DA of 65.05% may be rounded down to 65%.

The Labour Bureau releases the AICPI-IW data every month. The inflation index is calculated on the basis of retail prices collected from 317 markets spread over 88 industrially important centres in the country.

DA is revised twice a year for central government

Dearness allowance is revised twice a year for central government employees— on the basis of December and June AICPI-IW data. However, the announcement for the DA hike is not made on a fixed date. The Finance Ministry makes the announcement mostly during the festive season.

The government is yet to announce the DA hike for June 2026. However, as per the inflation index, it is estimated to be 63%.

AICPI-IW index from September 2025-August 2026 and DA

Month	Index Value
Sep-25	147.3
Oct-25	147.7
Nov-25	148.2
Dec-25	148.2
Jan-26	148.6
Feb-26	148.5
Mar-26	149.1
Apr-26	149.9
May-26	150.8
Jun-26	151.9
Jul-26	153.2
Aug-26	154.4
Average	149.81667
Estimated DA	65.05%= 65%

AICPI-IW data source: Labour Bureau website

How is DA for central government employees calculated?

DA is calculated based on a formula-

DA% = [{12-month average of AICPI-IW (base year 2001)– 261.42}/261.42x100]

However, we first need to link the 2016 base values to the 2001 base values by multiplying it by 2.88.

The factor of 2.88 is arrived at to equate the latest base year (2016) to 2001.

Labour 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, so the factor is calculated as 338 ÷ 117.4= 2.88.

What is the DA rate as per August 2026 AICPI-IW reading?

DA%= (149.82X2.88)– 261.42}/261.42X100] = (431.48-261.42)/(261.42)X100 = .6505X100= 65.05%= 65%

How can 65% DA help increase the salary of central government employees?

The current DA rate is 60% since the government is yet to announce the June DA rate. Let’s compare the estimated monthly salary hike at 60% and 65% DA rates:

Pay Level	Minimum Basic Pay (₹ per month)	DA amount (at 60%)	DA amount (at 65%)	Salary hike per month compared to current DA rate
Level 1	₹ 18,000	₹ 10,800	₹ 11,700	₹ 900
Level 2	₹ 19,900	₹ 11,940	₹ 12,935	₹ 995
Level 3	₹ 21,700	₹ 13,020	₹ 14,105	₹ 1,085
Level 4	₹ 25,500	₹ 15,300	₹ 16,575	₹ 1,275
Level 5	₹ 29,200	₹ 17,520	₹ 18,980	₹ 1,460
Level 6	₹ 35,400	₹ 21,240	₹ 23,010	₹ 1,770
Level 7	₹ 44,900	₹ 26,940	₹ 29,185	₹ 2,245
Level 8	₹ 47,600	₹ 28,560	₹ 30,940	₹ 2,380
Level 9	₹ 53,100	₹ 31,860	₹ 34,515	₹ 2,655
Level 10	₹ 56,100	₹ 33,660	₹ 36,465	₹ 2,805

As you can see, higher monthly salary hikes can be experienced at higher levels. However, these are estimates. Central government employees will get DA arrears as per the June AICPI-IW reading after the announcement.