The Union Cabinet has approved a 3 per cent point increase in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, raising both from 60 to 63 per cent of basic pay. The revision, announced on October 28, will be effective from July 1, 2026, ahead of Diwali.
The increase is expected to benefit around 48 lakh central government employees and 68 lakh pensioners. It follows the established formula based on the recommendations of the Seventh Pay Commission.
DA and DR are intended to offset the impact of inflation on employees’ salaries and pensioners’ fixed incomes. The allowances are revised twice a year, typically in January and July, based on changes in the Consumer Price Index for Industrial Workers (CPI-IW), published monthly by the Labour Bureau under the Ministry of Labour and Employment.
The latest revision follows a series of increases over the past three years. According to a letter cited by an employee union, the DA rate rose from 46 per cent in July 2023 to 50 per cent in January 2024, 53 per cent in July 2024, 55 per cent in January 2025, 58 per cent in July 2025 and 60 per cent in January 2026.
The latest hike takes the allowance to 63 per cent, marking a 17 percentage point increase since July 2023. Since the revised rate applies retrospectively from July 1, eligible employees and pensioners will receive the benefit from that date.
