Gujarat Government Announces 3% Increase in Consumer Price Index for Employees Ahead of Diwali Festival

The government, led by Prime Minister Narendra Modi, announced significant news for central employees ahead of the festive season. The wait for the Dearness Allowance (DA Hike) for July concluded after the Cabinet meeting approved a 3% increase in DA, along with the allocation of ₹10,016 crore for this purpose.

Typically, the central government announces the DA hike for its employees and pensioners in September or October, effective from July. Although an announcement before Durga was expected, the government provided a major gift before Diwali.

The Cabinet approved a 3% increase in the Dearness Allowance (DA) for central government employees. Previously, in April of this year, the first DA/DR hike for employees and pensioners was announced, increasing the DA by 2% to 60%. Thus, thanks to the government's decision to raise DA by 3%, the overall Dearness Allowance for central employees reached 63%.

It should be noted that the central government increases the Dearness Allowance twice a year to help employees and pensioners cope with inflation. The DA/DR hike occurs in January and July.

Earlier reports suggested a 3% rise in DA. The decision on the Dearness Allowance increase is based on data from the All India Consumer Price Index for Industrial Workers (AICPI-IW). According to the Bureau of Labor data, AICPI-IW rose by 1.2 points in August 2026 to reach 154.4. Based on current data for July 2026, a DA increase of 3–4 percentage points is projected.

Calculating the salary increase for central employees after receiving this festive gift in the form of a 3% DA hike is quite straightforward. The article presents calculation examples for various basic salary levels: ₹18,000, ₹25,000, ₹40,000, and ₹50,000.

The state government has made an important decision by announcing an increase in the inflation allowance for central employees. For a long time, central workers have been expecting the government to grant them a salary indexation increase for the Diwali holiday.

Just before Diwali, the Cabinet approved an increase in the inflation allowance, providing a significant gift to civil servants. An increase of 3 percent in the inflation allowance was approved for employees of the central government. Consequently, the inflation allowance for these workers increased by 3 percent, reaching 63 percent.

This increase in the inflation allowance applies to July. As a result of this increase, the salaries of central employees will increase in October. The total government expenditure related to this will amount to 10,016 crore rupees.

Central servants and pensioners are expecting an increase in the Dearness Allowance (DA) and Dearness Relief (DR) from July 2026. Since Diwali is celebrated on November 8th, there is hope for the allowance to be increased before the festival, which could lead to an increase in monthly salaries for employees and pensions for pensioners.

In this regard, there is discussion about whether the central government will announce an increase in DA for 2026 before Diwali. Currently, there is no official announcement date.

To ease the burden of inflation for central servants and pensioners, the government usually revises the Dearness Allowance and Dearness Relief twice a year. The first revision is considered effective from January, and the second from July. Currently, an announcement of changes from July 2026 is expected, and employees hope the government will do so before Diwali.

However, a final announcement before Diwali is not guaranteed, as the government has previously announced the Dearness Allowance even after the festival. Nevertheless, in most cases, announcements of bonuses and allowances have occurred during Diwali.

Analysis of inflation data from previous months shows that a 3 percent increase in the Dearness Allowance is expected from July. In that case, the Dearness Allowance could reach 63 percent. Similarly, an increase in DR is possible.

If the Dearness Allowance is increased in October before Diwali, the allowance will be paid for all four months starting from July. This amount will be added to the October salary. For example, if the basic salary is 18000 rupees, the current DA is 10800 rupees. After a 3 percent increase in DA, it will increase by 500 rupees to 11340 rupees. Thus, 2000 rupees will be added to the salary above the DA amount for 4 months.