A colleague recently pointed this out over tea, “Government employees got a 2% DA hike, but bank staff only got 0.70%. Isn’t that unfair?”
It’s a fair question. On the surface, the difference looks striking. But once you dig a little deeper, the story is less about inequality and more about how the system works.
Both bank employees and central government staff get Dearness Allowance (DA) based on inflation. The common base? The Consumer Price Index for Industrial Workers (CPI-IW).
But here’s where things start to differ.
As Adhil Shetty, CEO, Bankbazaar, explains, the gap comes from how this data is used. “Bank DA is revised quarterly and reflects incremental CPI-IW changes, so each increase is smaller. The using a 12-month average, which aggregates multiple months of inflation into one adjustment.”
In simple terms, bank employees get smaller, more frequent updates, while central government staff get fewer but larger jumps.
The latest revision increased bank DA from 25% to 25.70% for May–July 2026—a 0.70% rise. It may look modest, but it reflects only a three-month inflation movement.
Central government employees, on the other hand, saw their DA rise from 58% to 60%, i.e., a 2% jump. But that figure includes inflation trends accumulated over a longer period.
Shetty puts it neatly: “Central government DA uses a 12-month average, which smoothens short-term fluctuations and leads to more stable adjustments.”
So, while the number looks bigger, it’s also covering a longer stretch of time.
Another key reason lies in how pay structures are set.
Government employees follow the Central Pay Commission framework, where DA is revised twice a year, i.e., January and July.
Bank employees, however, operate under Bipartite Settlements between the Indian Banks’ Association and unions. This system allows for quarterly revisions.
“Bank and central government employees sit under entirely different pay-setting structures,” Shetty explains, adding that this is what drives the difference in revision frequency.
For bank employees, the advantage is that their DA responds faster to recent inflation trends. Even if each increase is smaller, adjustments happen more regularly.
For government staff, the benefit is larger, more visible hikes, but spaced out over time.
So, is one better than the other? Not necessarily.
The 0.70% vs 2% difference is not about favouring one group over another. It’s simply the result of two different ways of calculating and revising DA.
Once you understand the mechanics, the gap doesn’t seem as surprising. It’s just two systems reacting to the same inflation data, only in different rhythms.