Business EconomyPosted at: Oct 28 2026 4:41PM

New Delhi, Oct 20 (UNI) The union Cabinet on Wednesday cleared a 3 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, union Minister Ashwini Vaishnaw announced. The decision is expected to benefit more than 1.16 crore employees and pensioners.
The revised rates will come into effect from July 1, 2026, taking DA and DR to 63% from the existing 60% of basic salary and pension, respectively. The move is aimed at helping beneficiaries manage the impact of inflation on their household expenses.
"The revision will entail an additional annual expenditure of Rs 10,016 crore for the government. The increase has been approved in line with the established formula based on the recommendations of the 7th Central Pay Commission, Minister Vaishnaw said.
Dearness Allowance is paid to serving central government employees as a percentage of their basic pay, while Dearness Relief provides a corresponding inflation-linked benefit to pensioners. The two components are revised periodically to help offset the erosion in purchasing power caused by rising prices.
With the latest decision, eligible employees will receive DA at 63% of their basic pay, while pensioners will get DR at the same rate against their basic pension. Since the revised rate is effective from July 1, eligible beneficiaries will also be entitled to the applicable difference for the period between the effective date and the implementation of the hike.
The actual increase in monthly payments will depend on an individual's basic salary or pension. The 3 percentage point revision does not mean a 3% increase in the entire salary or pension, as DA and DR are calculated on the basic component.
The latest announcement follows the previous DA and DR revision approved in April 2026, when the government raised the rates by 2 percentage points to 60% of basic pay and pension.
The Centre generally reviews DA and DR twice a year, with revisions typically taking effect in January and July. These adjustments are based on the prescribed mechanism linked to inflation and the 7th Central Pay Commission framework.
The latest increase will raise the government's expenditure on salary and pension-related payments, while providing additional financial support to central government employees and pensioners amid changing living costs.UNI VK AAB