DA Hike News: Bumper increase in the salary of employees from January 2026… Big change in DA and fitment factor

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Amidst rising inflation and stagnant salary, the biggest relief for the employed people is Dearness Allowance. This allowance is revised by the central government every six months so that the salary of the employees can remain balanced according to the rising prices in the market.

But now this allowance is not only an immediate relief, but is also going to form the foundation of the possible 8th Pay Commission to be implemented in 2026. The recently released AICPI-IW (All India Consumer Price Index for Industrial Workers) data of July 2025 is giving important indications in this direction.

What is the whole matter?

The government decides the rate of DA every half year on the basis of AICPI-IW data. In the July 2025 data, the index has increased by 1.5 points to 146.5, which can become the basis not only for the next DA hike but also for the formula of the 8th Pay Commission.

According to financial expert HS Tiwari, this figure not only indicates an increase in DA, but it can also determine the fitment factor and minimum wages, as was done during the 7th Pay Commission in 2016.

What is the fitment factor? 

The fitment factor is the multiplier by which your current basic salary is multiplied to determine the new salary.

In the 7th Pay Commission, it was kept at 2.57.
This meant: an increase of about 14.2% in the total salary by adding the old basic pay + DA. Now if the DA rates are higher in the 8th Pay Commission based on the AICPI-IW index, then the fitment factor can also be bigger, due to which a strong increase in your basic salary is possible.

How is AICPI-IW linked to the new pay commission?

• Index of July 2025: 146.5
• This rate will affect the DA to be implemented from January 2026.
• On that basis, the new fitment factor and minimum wage will be decided in the Pay Commission report.
• Important point: As soon as the new Pay Commission is implemented, the DA rate gets reset (0%), but the existing data definitely forms the basis of the new pay formula.

How far has the government’s preparations reached?

At present, the government has not officially announced the ‘Terms of Reference’ of the 8th Pay Commission or the appointment of its chairman. Due to this delay, it may take some time for the report and recommendations to come, but preparations are going on secretly at the level of the Finance Ministry and the Labor Bureau.

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