The Union Cabinet has approved a hike of 3 percentage points in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, from 60% to 63% of basic pay and pension, the government announced on Wednesday.
The increase will take effect retrospectively from July 1, 2026, and is expected to benefit about 48.54 lakh central government employees and 68.71 lakh pensioners, according to a statement issued by the Press Information Bureau. The sum of the total annual cost of the government is 10,016.10 crore rupees.
The Cabinet decision is taken following the formula (as per the Seventh Central Pay Commission recommendations) and is meant to cushion the blow of inflation for employees and pensioners.
The dearness allowance is paid to serving government employees and the dearness relief is given to pensioners. The rates are normally reviewed two times every year with the adjustments counting from January and July.
The new uplift will be paid as arrears to the eligible employees and pensioners from 1 July, in accordance with the specified payment periods.
The Government takes into account inflation figures for revision of allowances, taking the Consumer Price Index for industrial workers as the base for its calculation.
