The Seventh Central Pay Commission (CPC) in January 2016 started the 7th CPC which was implemented and ended officially on December 31, 2025. Nevertheless, the impact of this commission is now felt in the early 2026 with the recent DA hike. This adjustment is very important, considering that over 5 million government employees and nearly 7 million pensioners are getting their salaries and pensions adjusted according to the inflation rate.
Dearness Allowance Hike
A 2% increase in DA and DR from 1st January, 2026, was announced by the government, thus taking the rate from 58% to 60%. The increase is based on the Consumer Price Index for Industrial Workers (CPI-IW), which had a gradual rise in the late 2025. The hike not only increases the net salaries and pensions but also helps the employees and pensioners to some extent against the increase in living costs.
Transition to the 8th Pay Commission
The 8th Pay Commission is an established successor to DA increases based on the 7th CPC when the employees are still clamoring for pay rise. The new Commission will be led by Justice Ranjana Prakash Desai who will suggest an entirely new salary structure. Although it is believed that the recommendations will be out by May 2027, the beneficiaries will be from January 1, 2026, thus the payment for the past period will accumulate till the operation is complete.
Impact on Employees and Pensioners
The DA hike gives an immediate financial relief but the major change would be coming with the 8th CPC. Rising inflation and the high cost of living have raised the expectation of a fitment factor between 1.83 to 2.46 which could double or even more the existing basic salary and allowances. The DA hike for now will be the only source of income stability per month.
Trends of Salary Under 7th CPC
The following table illustrates the DA changes under the 7th Pay Commission together with the latest update in January 2026:
| Year | DA Rate (%) | Key Update |
|---|---|---|
| 2016 | 0% | Start of 7th CPC |
| 2020 | 17% | Pandemic freeze lifted |
| 2023 | 46% | Inflation-driven hike |
| 2025 | 58% | Pre-commission end |
| Jan 2026 | 60% | Final DA hike under 7th CPC |
Final Thought
The DA increase of January 2026 to 60% is the final major update of the 7th Pay Commission. Though this gives immediate relief, the real change will be through the 8th Pay Commission which sure provides a huge salary and pension revision. For the millions of employees and pensioners, 2026 is a transitioning year where they will be exercising patience for the long-term benefits while enjoying the relief in the short-run.