The Union Cabinet has approved an additional instalment of Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, effective from 1 January, 2026.
The latest revision increases DA and DR by 2 percentage points from the existing rate of 58 per cent of basic pay or pension. The move is aimed at providing compensation for the impact of rising prices and will benefit more than 50 lakh Central government employees and over 68 lakh pensioners.
The increase is expected to add more than Rs 6,791 crore annually to the government’s expenditure.
Dearness allowance and dearness relief are revised periodically to help employees and pensioners offset the impact of inflation and rising living costs. The latest increase follows the recommendations of the accepted formula based on the Consumer Price Index for Industrial Workers (CPI-IW).
The decision comes as a significant relief for government employees and pensioners, boosting their take-home pay and retirement benefits amid persistent inflationary pressures.
Separately, the Cabinet approved the continuation of Pradhan Mantri Gram Sadak Yojana-III until March 2028. The scheme will focus on upgrading rural roads and major links connecting habitations with agricultural markets, higher secondary schools and hospitals. Its revised outlay has been set at Rs 83,977 crore.
The Cabinet Committee on Economic Affairs also approved two railway multi-tracking projects worth Rs 24,815 crore. The Ghaziabad-Sitapur and Rajahmundry-Visakhapatnam projects will cover 15 districts across Uttar Pradesh and Andhra Pradesh and are expected to increase rail capacity, reduce congestion and improve operational efficiency.
