Can DA for Jan 2027 rise to 68%? See estimates

The Labour Bureau has released retail inflation figures for September 2026. Retail inflation, which is tracked by the All India Consumer Price Index – Industrial Workers (AICPI-IW), hit 155.4 in September, a full 1 point higher than the August figure of 154.5.

Following the September retail inflation update, the running DA has reached 65%. However, the next announcement for a DA increase (for January 2027) will depend on the average inflation from January to December 2026.

But first, understand how the running DA rate climbed to 65% following the September inflation data.

When we calculate DA, we consider the retail inflation over the past 12 months. The Labour Bureau releases the inflation data for the previous month at the end of the following month. For example, the inflation data for April is released at the end of May.

To determine the current DA rate, we will look at the average inflation from October 2025 to September 2026.

However, for calculating DA, we first have to link the 2016 base value to the 2001 base value 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.

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

DA% after September inflation data= (150.5X2.88)– 261.42}/261.42X100] = 65.81% (65%)

The government doesn’t calculate DA in decimals, and a 65.81% DA is effectively a 65% DA. However, 0.81% gets adjusted to the next DA cycle.

Can DA reach 67% or 68% for January 2027?

It depends on the retail inflation data for October, November and December. Since it will take a few months to know them, we can assume three inflation scenarios in the next three months.

Scenario 1: If inflation declines

Given the current scenario of rising fuel costs, domestic market instability and geopolitical factors, the chances of a decline in retail inflation are low. But if we assume that it would slip back to the August, July and June 2026 levels of 154.5, 153.2 and 151.9, respectively, in October, November and December, the estimated DA for January 2027 would be 67.23%= 67%.

Scenario 2: If inflation rises

If inflation keeps rising at the same levels as it rose in the last 3 months, and we assume 156.8, 158.1 and 159.1 inflation for October, November and December, the estimated DA for January can reach 68.56%= 68%.

Scenario 3: If inflation remains the same

If retail inflation in October, November and December remains the same as in September, the estimated DA for January will be 67.78%= 67%.

Therefore, it is evident that if inflation increases, central government employees might receive 68% DA for January 2027. If it decreases to the levels of the past three months or remains the same as in September, the projected DA for January 2027 could be 67%.

But these are estimates and the final decision on the DA hike rests with the Finance Ministry.