All-India Consumer Price Index for Industrial Workers

The All-India Consumer Price Index for Industrial Workers (AICPI-IW) is the retail price index compiled monthly by the Labour Bureau on a base of 2016 equal to 100, whose 12-month average fixes the dearness allowance of central government employees and the dearness relief of pensioners. The index stood at 151.9 points for June 2026, published in Labour Bureau press release F. No. 5/1/2021-CPI dated 31 July 2026.

That single number carries the pay of about 49 lakh serving employees and the pension of about 66 lakh pensioners. Dearness allowance is 60% of basic pay from 1 January 2026, and the completed 12-month window to June 2026 computes to 63% from 1 July 2026, awaiting the order.

The index prices a fixed basket of 463 items bought by working-class families in 88 industrially important centres, and it exists to measure what those families actually pay at the shop counter rather than what the wider economy pays. Its movement is the mechanism by which the government protects the real value of pay against retail inflation, without a negotiation and without a discretionary decision on the rate.

This article sets out the current index value and the revision it decides, the exact arithmetic that turns an index number into a dearness allowance percentage, the 2.88 linking factor that most incorrect calculations omit, how the Labour Bureau builds the series, and the other payments the same index governs in public sector enterprises and under minimum-wage law.

Latest index value and the revision it decides

AICPI-IW for June 2026 is 151.9 points on the 2016 base, up 1.1 points from 150.8 in May 2026, published by the Labour Bureau in press release F. No. 5/1/2021-CPI dated 31 July 2026. Year-on-year retail inflation for industrial workers on that reading is 4.76%, against 4.72% a month earlier.

June is the closing month of the window for the 1 July 2026 dearness allowance revision, so that release completed the arithmetic. The 12-month average for July 2025 to June 2026 is 428.11 on the 2001-equivalent scale, which puts the computed percentage at 63.76%.

The rate in force remains 60% of basic pay, notified by Department of Expenditure Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026. No order for the 1 July 2026 revision had issued as on 18 August 2026.

February 2026 is the only month in that run to fall, by 0.1 point, and it did not change the direction of the average. The expected DA tracker follows the running average as each month is published.

The formula that turns the index into a percentage

The dearness allowance percentage is the 12-month average of AICPI-IW minus 261.42, divided by 261.42, multiplied by 100. Written out:

DA percentage = [ ( (12-month average of AICPI-IW on the 2016 base x 2.88) minus 261.42 ) / 261.42 ] x 100

The constant 261.42 is the 12-monthly average of the index for calendar year 2015 on the 2001 series, the point at which the 7th Central Pay Commission reset dearness allowance to zero on 1 January 2016. Every rate since measures how far retail prices for working-class families have risen above that 2015 level.

The averaging windows are fixed and do not shift with the date of the order. The 1 January revision uses the average of the previous January to December; the 1 July revision uses the average of the previous July to the current June. Dearness allowance is therefore revised twice a year and not monthly, so a single volatile reading cannot swing it: one month enters the average at a twelfth of its own weight.

The result is stated as a whole number. No Department of Expenditure order prescribes how the fraction is treated, and across every revision since 1 January 2016 the notified rate equals the computed percentage with the fraction dropped.

The 2.88 linking factor and the 2016 base

Every 2016-base monthly value must be multiplied by 2.88 before it enters the dearness allowance formula, because the constant 261.42 belongs to the 2001 series. Skipping that step and subtracting 261.42 from a raw 2016-base average is the single most common error in dearness allowance calculation, and it is why incorrect figures circulate every revision season.

The Labour Bureau released the 2016 series on 22 October 2020, first publishing it for the September 2020 index, which stood at 118 on the new base. It published a linking factor of 2.88 at the same time, the ratio that converts a value on the 2016 base back to the 2001 base for continuity. A 2016-base index of 100 corresponds to about 288 on the old base; the June 2026 reading of 151.9 corresponds to 437.5.

An index needs a base, a reference point set to 100 against which later values are measured, and AICPI-IW has been re-based several times as consumption patterns shifted, from earlier 1960 and 1982 bases to 2001 and then to 2016. Re-basing matters for pay because the whole dearness allowance formula was calibrated on the 2001 series and was not re-derived when the base changed; the linking factor is what holds the two together.

The official factor is 2.88. Higher figures such as 3.35 appear in staff-side critiques arguing that a different bridge would produce a higher allowance, but 2.88 is the number the Department of Expenditure uses and the only one that reproduces a notified rate.

Worked example: the 60% effective 1 January 2026

Dearness allowance rose from 58% to 60% with effect from 1 January 2026 on the 12-month average of AICPI-IW for January to December 2025. That average worked out to about 419 on the 2001-equivalent scale, which the formula turns into 60.34%: 419 minus 261.42 is 157.58, divided by 261.42 is 0.6028, multiplied by 100 is a shade over 60. The notified rate is the whole number, 60.

The Union Cabinet approved the revision on 18 April 2026 and the Department of Expenditure issued Office Memorandum No. 1/1(i)/2026-E.II(B) on 22 April 2026, nearly four months after the effective date. Three months of arrears, for January, February and March 2026, were released with the April 2026 salary.

The rate then applies to basic pay, meaning the cell value from the employee’s level and stage in the pay matrix. An employee at Level 7 entry cell, basic pay Rs. 44,900, draws Rs. 26,940 a month as dearness allowance at 60%; at Level 10 entry cell, basic pay Rs. 56,100, the figure is Rs. 33,660. Pensioners draw the identical percentage as dearness relief. The 7th CPC salary calculator applies the rate to a chosen level and cell, and the DA arrears calculator works out the lump sum for the months between the effective date and the order.

The 1 July 2026 revision: computed at 63.76%, not notified

The index data for the 1 July 2026 revision is complete and gives 63%, but the rate is not payable until the order issues. The 12-month average of AICPI-IW for July 2025 to June 2026 is 428.11 on the 2001-equivalent scale. Putting it through the formula: 428.11 minus 261.42 is 166.69; divided by 261.42 is 0.6376; multiplied by 100 is 63.76%. Stated as a whole number, 63%, a rise of three points from the 60% in force.

Nothing about that arithmetic is provisional. What remains is the Cabinet decision and the Department of Expenditure Office Memorandum, and for a July revision those have historically come in September or October. As on 14 August 2026 neither had happened, so the rate payable is still 60%.

Any figure presented as the July 2026 dearness allowance before the Office Memorandum issues is a computation, not an entitlement. The distinction matters at the pay counter: arrears run from 1 July 2026 whenever the order comes, but nothing is disbursed until it does.

What the index measures

AICPI-IW prices the consumption of one specific population, industrial workers and their families, not consumers at large. It is a working-class cost-of-living index, which is why it, rather than the wider Consumer Price Index, governs dearness allowance for government employees, Industrial Dearness Allowance in public sector enterprises, and the periodic revision of minimum wages.

The 2016 series covers 88 centres across 28 states and union territories, against 78 centres and 25 states and union territories in the 2001 series. Prices come from 317 selected markets, up from 289, for a basket of 463 items, up from 392. The weights come from a Working Class Family Income and Expenditure Survey of 48,384 families, against 41,040 in the earlier series.

Those 463 items fall into six groups: food and beverages; pan, supari, tobacco and intoxicants; clothing and footwear; housing; fuel and light; and miscellaneous, the last covering health, education, recreation, transport, communication, personal care and household goods and services.

Food and beverages remains the largest single group but no longer approaches half the basket. Its weight fell to about 39% in the 2016 series from 46.2% in the 2001 series, while the miscellaneous group rose to 30.31% from 23.26% and housing gained share. That shift is why a bad month for cereals or vegetables still moves the all-India index, but moves it less than it would have under the old weighting diagram.

How the Labour Bureau compiles it

The index rests on a standing price-collection operation running to a fixed schedule in all 88 centres. Trained price collectors visit the 317 selected markets on fixed days and record retail prices against a defined specification for each item, so that a change in quality is not read as a change in price.

Food prices are collected weekly because they move fastest; most other items are priced monthly. The centre-level indices are then combined into the all-India figure, weighted by each centre’s working-class population.

Each monthly release carries both the all-India number and the centre-wise numbers, and the spread between centres is wide. Only the all-India figure enters the dearness allowance formula, so a sharp rise in one city has no direct effect on any employee’s allowance, whatever their posting.

The weights are fixed for the life of a base year. That is the standing argument for periodic re-basing: consumption drifts, and a basket frozen in 2016 slowly stops resembling what a working-class family buys in 2026.

Release schedule and how to read a monthly release

The Labour Bureau releases the all-India index on the last working day of the succeeding month. The June 2026 index came on 31 July 2026 and the May 2026 index on 30 June 2026, so the series always runs one month behind the calendar.

Two habits avoid the usual mistakes with a release. First, confirm which base a quoted value sits on: a figure near 150 is on the 2016 base, and a figure in the 300s or 400s is on the 2001 base, or a 2016-base value already multiplied by 2.88. Mixing the two is the commonest source of a wrong dearness allowance, and the gap is not subtle: 151.9 and 437.5 are the same June 2026 reading.

Second, read the month against the 12-month average rather than on its own. A single sharp month does not change dearness allowance; it moves the average that the next half-yearly revision will use, by roughly a twelfth of its own movement.

The release also reports year-on-year inflation for industrial workers, 4.76% for June 2026. That number describes the pace of price rise and is not the dearness allowance formula’s input, which is the level of the index averaged over 12 months.

Rounding: what the orders prescribe and what they do not

No Department of Expenditure order prescribes a rounding rule for the dearness allowance percentage. Each Office Memorandum states the rate as a decided figure and gives no derivation, so the treatment of the fraction has to be read off the sequence of orders rather than a published instruction.

Every rate notified since 1 January 2016 has been a whole number, and in each case the notified rate equals the computed percentage with the fraction dropped: 60.34% became 60%, and 63.76% computes to 63%. That is an observation from the orders, not a rule stated in one.

There is a rounding rule in the orders, but it applies to money rather than to the percentage. Paragraph 4 of each Office Memorandum directs that fractions of 50 paise and above in the payment be rounded to the next higher rupee and fractions below 50 paise be ignored.

Industrial Dearness Allowance in public sector enterprises

The same index sets a different allowance on a different cycle for central public sector enterprises. The Department of Public Enterprises fixes Industrial Dearness Allowance on AICPI-IW but revises it quarterly, with effect from 1 January, 1 April, 1 July and 1 October, against link points specific to each pay-revision vintage rather than the single 261.42 constant.

By Office Memorandum No. W-02/0037/2025-DPE(WC)/FTS-14505 dated 17 July 2026, Industrial Dearness Allowance with effect from 1 July 2026 is 55.7% for executives and non-unionised supervisors on the 2017 pay scales, 241.7% on the 2007 scales and 476.9% on the 1997 scales. The percentages differ so widely because each scale was fixed at a different index level and the allowance has accumulated from that point.

An employee of a central public sector enterprise therefore draws 55.7% on the current scales while a central government employee draws 60%, from the same index in the same month. The rates are not comparable as a measure of generosity: they are neutralisation from different starting points, on different cycles.

Variable dearness allowance and minimum wages

AICPI-IW also fixes the variable dearness allowance component of statutory minimum wages. For scheduled employments in the central sphere under the Minimum Wages Act, 1948, the Chief Labour Commissioner (Central) revises variable dearness allowance twice a year, with effect from 1 April and 1 October, on the movement of the index.

State governments notify their own minimum wages on their own dates, most of them also keyed to CPI-IW, so a single monthly release from the Labour Bureau reaches far beyond government service. Bank and public sector wage settlements likewise carry index-linked dearness allowance clauses drawn on the same series.

That reach is why the release is watched by people who draw no government pay at all, and why the base-year question is contested well outside the staff-side federations.

Minimum pay and the Aykroyd formula

The index sets the floor of the pay matrix as well as the allowance paid on top of it. The Aykroyd formula, the need-based method a pay commission uses to fix entry-level minimum pay, prices a notional family’s requirements of cereals, pulses, vegetables, clothing, fuel and the rest at retail rates, and AICPI-IW is the price series those requirements are costed against.

The Rs. 18,000 minimum set by the 7th Central Pay Commission from 1 January 2016 came out of that exercise. The dearness allowance of 60% now paid on it comes from the same index measured against 261.42, so both halves of the lowest pay packet in central service trace to one Labour Bureau series.

Comparison with the other Indian retail price indices

India publishes several retail price indices and using the wrong one is a routine confusion. The headline retail inflation number reported each month is the Consumer Price Index (Combined), compiled by the National Statistical Office in the Ministry of Statistics and Programme Implementation on a 2012 base for all consumers, and it is the series the Reserve Bank of India targets for monetary policy.

Government pay is tied to the industrial-workers index by design rather than by accident. Dearness allowance compensates employees for their own cost of living, so a working-class index with a heavier food weight was judged the fair measure. A fall in the headline inflation rate reported in the news therefore does not automatically slow dearness allowance, because the two series weight the basket differently and sit on different bases.

Whether dearness allowance can fall

The formula is symmetric and would return a lower percentage on a sustained fall in the 12-month average, but no reduction in dearness allowance has been notified since the rate was reset to zero on 1 January 2016.

The averaging is what makes a cut improbable rather than any protective provision. A single month enters at a twelfth of its weight, so reversing an accumulated 60% would take a deep and prolonged fall in retail prices, not one soft quarter.

The nearest the rate has come to moving backwards was a freeze, not a cut. Office Memorandum No. 1/1/2020-E.II(B) dated 23 April 2020 held dearness allowance and dearness relief at 17% for three instalments, from 1 January 2020 to 30 June 2021, and the rate was restored at 28% from 1 July 2021 without arrears for the frozen period. The index kept rising throughout; what stopped was the payment, by a decision recorded in an order, and not the arithmetic.

Bearing on the 8th Central Pay Commission

AICPI-IW continues to set dearness allowance under the 8th Central Pay Commission, with the counter restarting from zero on implementation. When a pay commission takes effect the accumulated dearness allowance is merged into revised basic pay, as the 125% then in force was absorbed on 1 January 2016 through the 2.57 fitment factor, and the percentage begins again from nil against a fresh base index.

The level of dearness allowance at the changeover therefore feeds directly into the arithmetic of the new pay structure, which is why staff-side federations track the running average so closely in the run-up to a commission. The 8th Pay Commission status tracker carries developments as they are notified.

A merger before implementation has been refused on the record. Answering Lok Sabha Unstarred Question No. 212 on 1 December 2025, the Minister of State for Finance stated that no proposal regarding the merger of the existing dearness allowance with basic pay is under consideration.

Criticism of the index

The standing objection is that the base lags the present. A 2016 base means the weighting diagram reflects a survey of consumption from a decade ago, and staff-side bodies argue that a working-class family’s spending on health, education and transport has moved further since than the 30.31% miscellaneous weight allows.

The linking factor draws its own criticism. Some staff-side commentators argue that a factor higher than 2.88 would better reflect the transition and would yield a higher allowance; the Department of Expenditure treats 2.88 as the official bridge, and it is the figure that reproduces every notified rate.

Two procedural complaints recur: that 88 centres understate the spread of industrial employment, and that a one-month publication lag on top of a 12-month average makes the allowance respond slowly to a sharp price movement. An employee facing a rise in food prices in July 2026 sees it reflected in pay from 1 January 2027 at the earliest.

None of these arguments changes what an employee is paid. The allowance is whatever the formula on the official base produces, and the formula runs on the published index.

Related Articles

• Dearness allowance: the 60% rate in force, its revision cycle, arrears and tax treatment.
• Dearness relief: the same percentage paid to pensioners by the Department of Pension and Pensioners’ Welfare.
• Expected DA: the running 12-month average and the next projected revision.
• Dearness pay: the discontinued mechanism that converted part of dearness allowance into pay.
• Labour Bureau: the office of the Ministry of Labour and Employment that compiles the index.
• Industrial Dearness Allowance: the quarterly rate for central public sector enterprises.
• Variable dearness allowance: the index-linked component of statutory minimum wages.
• Minimum pay: the Rs. 18,000 floor of the pay matrix.
• Aykroyd formula: the need-based method that prices minimum pay against retail rates.
• Pay matrix: the table of levels and cells that dearness allowance is applied to.
• Fitment factor: the multiple that absorbs accumulated dearness allowance into revised pay.
• 7th Central Pay Commission: the report that set the current dearness allowance formula.
• 8th Central Pay Commission: the commission that will reset the counter.
• 8th Pay Commission status tracker: notified developments as they happen.
• House rent allowance: the allowance whose rates escalate at dearness allowance milestones.
• Central government employees: the wider pay and allowance framework.
• Department of Expenditure: the department that issues the dearness allowance orders.
• 7th CPC salary calculator: the current rate applied to a level and cell.
• DA arrears calculator: the arrears from a dearness allowance revision.
• Expected DA calculator: the projected rate from the running index average.

External references

• Labour Bureau: Consumer Price Index for Industrial Workers
• Ministry of Labour and Employment
• Department of Expenditure, Ministry of Finance
• Department of Public Enterprises
• Chief Labour Commissioner (Central)
• Ministry of Statistics and Programme Implementation