8th Pay Commission: Why Is DA Hike for January 2026 Likely To Be Only 2 Percent?

New Delhi, February 5: The beginning of the 8th Pay Commission era is unlikely to bring immediate cheer for central government employees and pensioners. Latest inflation data clearly indicates that the DA Hike January 2026 will be restricted to a modest 2 percent, raising Dearness Allowance and Dearness Relief from 58 percent to 60 percent of Basic Pay.

The increase is expected to be cleared by the Union Cabinet in the first or second week of March 2026, just ahead of Holi. This will also be the first DA revision after the end of the 7th Pay Commission, whose tenure officially concluded on December 31, 2025.

CPI IW Data Confirms 2 Percent DA Hike

The confirmation comes after the Labour Bureau released the All India Consumer Price Index for Industrial Workers for December 2025, which remained unchanged at 148.2 points.

With the December data now available, the DA calculation for the January to June 2026 cycle is locked. Based on the 12 month average CPI IW from July to December 2025, Dearness Allowance works out to 60.34 percent under the 7th CPC formula. 8th Pay Commission Salary: Will Minimum Basic Pay Reach INR 51,480 Under 8th CPC? Check Expected Salary Hike and Fitment Factor Here.

As per convention, the government rounds off the figure and drops the decimal, effectively fixing DA and DR at 60 percent from January 1, 2026.

Lowest DA Hike In More Than Seven Years

A 2 percent increase in DA is relatively uncommon. Central government employees last saw such a small hike in July 2018 and January 2025. This makes the upcoming revision the lowest DA hike in over seven years, despite inflation remaining sticky. 8th Pay Commission Latest News: How Much Fitment Factor Is Expected in the 8th CPC? Check Details.

For employees and pensioners who were expecting stronger inflation linked relief at the start of a new pay commission cycle, the outcome comes as a disappointment.

Why DA Hike January 2026 Is Crucial Under The 8th Pay Commission

The January 2026 DA revision carries long term implications beyond the immediate increase.

This is the first DA hike outside the 7th Pay Commission framework, making it a transition phase adjustment. While the 8th Pay Commission has been constituted, its Terms of Reference do not specify a fixed implementation timeline.

The commission has up to 18 months to submit its report, followed by additional time for government examination and approval. Based on past pay commission cycles, actual salary and pension hikes under the 8th Pay Commission may only be implemented by late 2027 or early 2028.

Slow DA Growth May Cap Future Salary And Pension Revision

Employee concerns deepen when viewed through the mechanics of pay commission implementation.

When a new pay commission comes into force, the prevailing DA is usually merged into Basic Pay, and DA is reset to zero. The fitment factor, which determines revised pay and pension, is heavily influenced by the DA level at the time of merger.

With DA starting at 60 percent in January 2026 and expected to rise slowly in the coming cycles, the DA available for merger under the 8th Pay Commission may remain limited. As a result, the minimum fitment factor is now being estimated at around 1.60.

In effect, slower DA growth now means a lower DA base for merger later, which can permanently cap revised salaries and pensions for serving employees and retirees under the 8th Pay Commission.

(The above story first appeared on LatestLY on Feb 05, 2026 03:46 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).