Cabinet hikes DA by 3% to 63%, benefiting 1.17 crore employees and pensioners

New Delhi: The Union Cabinet on Wednesday approved a 3 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the rates from 60 percent to 63 percent of basic pay and pension.

The decision will benefit approximately 1.17 crore employees and pensioners across the country and entail an additional annual expenditure of Rs 10,016.10 crore for the central government.

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Announcing the Cabinet's decision, Information and Broadcasting Minister Ashwini Vaishnaw described the increase as a "Diwali gift" for government employees and pensioners.

The revised rates will take effect retrospectively from July 1, 2026, making eligible employees and pensioners entitled to arrears for the intervening period.

Over 48 lakh employees to benefit

According to an official statement, the increase will cover approximately 48.54 lakh central government employees and 68.71 lakh pensioners.

The government said the additional instalment represents "an increase of 3 percent over the existing rates of 60 percent of the basic pay/pension, to compensate against price rise".

Dearness Allowance and Dearness Relief are periodically revised to offset the impact of inflation on the salaries and pensions of government employees and retirees.

The latest revision means an employee drawing a basic salary of Rs 50,000 per month will receive an additional Rs 1,500 in DA every month, while a pensioner receiving a basic pension of Rs 25,000 will get an additional Rs 750 in monthly relief.

Hike based on 7th Pay Commission formula

The government said the revision follows the accepted formula based on the recommendations of the 7th Central Pay Commission.

DA and DR revisions are generally undertaken twice a year, with effect from January 1 and July 1, based on movements in the relevant consumer price index.

The latest increase will provide additional disposable income to central government employees and pensioners, potentially supporting household consumption and spending.

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However, the decision will also add over Rs 10,000 crore annually to the Centre's recurring expenditure commitments.

With the revised rates applicable from July, beneficiaries will receive the benefit of the increase for the period preceding its implementation, subject to the government's payment schedule.

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