- DA, DR RAISED FROM 60% TO 63%: Cabinet clears additional instalment effective July 1, 2026
- 1.17 CRORE BENEFICIARIES: 48.54 lakh Central Government employees and 68.71 lakh pensioners to gain
- ₹10,016-CRORE ANNUAL OUTLAY: Combined financial impact of the hike on the Union exchequer
- 7TH PAY COMMISSION FORMULA: Inflation-linked revision aims to cushion employees and retirees against rising prices
NE ECONOMIC BUREAU
NEW DELHI, OCT 28
With festive shopping, household budgets and inflation competing for attention ahead of Diwali, the Union Cabinet has delivered a financial boost to millions of Central Government employees and pensioners. The additional 3% Dearness Allowance (DA) and Dearness Relief (DR) may not be a windfall, but it offers incremental support to serving employees and retirees grappling with rising living costs.
The Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved an additional instalment of DA for Central Government employees and DR for pensioners, effective retrospectively from July 1, 2026. The revision raises the rates from the existing 60% to 63% of Basic Pay and pension, respectively, providing inflation-linked relief ahead of the festive season. <Cite refs={[“turn107810search0″,”turn107810search2”]}/>
The decision will benefit approximately 48.54 lakh Central Government employees and 68.71 lakh pensioners, taking the combined number of beneficiaries to around 1.17 crore. The annual financial implication for the Union Government is estimated at ₹10,016.10 crore.
The increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission. DA is intended to help serving employees offset the impact of rising prices, while DR provides corresponding inflation-linked support to pensioners.
Retrospective relief from July
As the enhanced rates take effect from July 1, eligible employees and pensioners are entitled to the revised DA or DR from that date. The precise payment schedule for any resulting arrears will depend on the applicable government orders and implementation arrangements.
For employees, the additional allowance will be calculated against Basic Pay, while pensioners will receive the corresponding increase based on their eligible pension. The actual monetary benefit will therefore vary according to individual pay or pension levels.
The Cabinet decision comes amid continuing discussions on the country’s next pay-revision framework, with the 8th Central Pay Commission also in focus among employees’ and pensioners’ organisations. The latest DA and DR revision, however, is based on the existing 7th Pay Commission-linked formula. <Cite refs={[“turn107810search0″,”turn107810search11”]}/>
A festive boost, but inflation remains the test
The hike provides additional financial support at a time when households face competing demands from everyday essentials, healthcare, education and festive expenditure. For pensioners, particularly those dependent largely on fixed monthly incomes, the increase offers some additional protection against erosion in purchasing power.
The broader impact will depend on how prices move in the coming months and how effectively the additional allowance offsets increases in household expenses. For now, the Cabinet’s decision delivers a timely pre-Diwali boost, with the enhanced rates applicable from July 1.